Redesign the Paradigm

In the first blog of this series, Problems in the U.S. Critical Sectors – Monetary & Banking, Energy, Healthcare, Food Production, and Government – An Analysis the major economic sectors critical to the survival of a modern day society were identified and their long term problems addressed. These sectors include: monetary & banking system, energy production, healthcare, food production, and water distribution. It was also noted that a stable and reliable government free of corruption is necessary to ensure proper legislation and regulation.  Finally, it was pointed out that if problems in these sectors remain unresolved they can have serious long term consequences for our economy even changing the lifestyles that Americans have grown accustomed to.

In the second blog, Problems in U.S. Critical Sectors  - Monetary & Banking, Energy, Healthcare, Food Production, and Government – The Cause problems in our critical sectors were identified as residing in a significant resistance to change from those who seek to maintain the status quo and the massive profits and wealth it generates for them. The underlying reasons for the resistance to change was also identified as an age old belief system which promotes selfish individual / group gain and achievement over all else. This philosophy has little regard for long term public or environmental consequences. In today’s world its mantra is “economic growth at any cost”, and it favors and rewards those who strive for profit maximization, wealth generation, and the influential connections to political power that ensure ongoing control. Ultimately it is greed, avarice, selfishness, and mammon (love for money above all other things). This philosophy is prevalent in many of the country’s most wealthy and influential. Their businesses and special interests constitute many of our nation’s largest investment groups and Multi National Corporations (MNC’s) and have considerable sway over our country’s critical sectors.

Societies have been warned throughout the ages by their greatest teachers and spiritual leaders of what would happen if too much wealth and power were concentrated amongst those who embrace this philosophy. Let us now consider the effects the past actions have had on our critical sectors and how the American public is faring.

Monetary System:

• U.S. national debt and lack of fiscal responsibility continues to rise making our international debtors lose confidence in our ability to pay.
• Effect – International debtors are already shying away from U.S. treasuries and looking for different currencies other than the dollar to conduct international commerce. If this keeps up expect a devaluation of U.S. treasuriesand the dollar
• Effect on main street America – foreign goods (big box store products) become more expensive and Americans experience more inflation
• The FED is caught between trying to stimulate the ec onomy with Quantitative Easing (QE) or printing money and buying financial assetsfrom large banks to increase their reserves combined with artificially keeping interest rates low, and running the risk of devaluing the dollar by printing to much money and increasing inflation by keeping the interest rates artificially low for to long.
  • Effect – The FED will likely continue the current practice of” printing money” (actually its all electronic transfers now). Large banks will continue to influence / pressure the FED to keep supplying them with free money to invest with because it is profitable for them to do so. This outcome, while beneficial for large banks and MNC’s, if continued only further lowers international debtor confidence which further devalues the dollar.
    • Note – this money is being spent on large MNC’s and in financial markets i.e. derivatives, it has not been used as was originally intended to relax credit for small / medium businesses which are the primary drivers of Gross Domestic Product (GDP) and job growth.
  • Effect on main street America - foreign goods become more expensive thus increasing inflation.

Financial /Banking System:

• Wall Street financial institutions increasingly invest in derivatives and other financial instruments that don’t contribute to GDP.  One in every three dollars is tied up in exotic financial investments like derivatives (hedges or bets on a derived value), this is essentially pulling money out of the economy that could be better used manufacturing, innovation, etc. They are also limiting investing to what they believe are safer investments – large MNC’s with global exposure in the growing economies inAsia.
  • Effect – Our largest banks virtually ignore startups, small, and medium sized business that are critical to job growth and who provide the bulk of taxable corporate revenue necessary in paying down the national debt. This has created credit restrictions to small / medium businesses which limit their expansion capabilities and our country’s job growth (85% of jobs).
  • Effect on main street America - Fewer manufacturing and other skilled labor jobs as large MNC’s export them overseas. Continuation of stagnant wages experienced in real world dollars since 2000. Fewer opportunities as growth slows and recession continues (unless you actually believe its over for most Americans)

Energy production:

• Readily available fossil fuels are becoming scarce. Extraction processes are increasing in costs and it is requiring more oil to
  extract resources. Some extraction processes are damaging the environment and contaminating water supplies.
  • Effect – Barriers to entry to protect profits from the fossil fuel industry for alternative energy resources guarantees that no
    significant funding or subsidies will become available (fossil fuel companies still enjoy subsides despite a decade of record profits). Global world production has plateau in the past 4 years while demand continues to increase.
  • The effect on main street America – Increasing energy costs at the pump and in electrical bills.  Increased inflation since almost everything has to travel hundreds of miles to get to its sales destination. Consider food which travels almost one thousand miles from processing plant to grocer. Fracking and other similar approaches contaminate
    local water supplies.

Healthcare costs:

• Insurance Companies are increasing premiums and stripping away benefits in response to rising healthcare costs in order to meet profit expectations. All this while industry executives enjoy some of the highest salaries of any industry. Billing practices have become convoluted and confusing for anyone not in a billing department.  Simple surgeries or routine testing can cost
  thousands of dollars.
  • Effect – Medical bills represent 2/3 of U.S. bankruptcies and this includes people with “good Insurance”. Huge lobbying
    efforts, campaign contributions, and sympathetic media outlets successfully act as deterrents to real non profit healthcare insurance companies or the creation of a national insurance program from which they would have to compete against.
  • Effect on main street America – Rates continue to rise while coverage becomes limited. As more baby boomers
    reach retirement age requiring additional expensive treatments for chronic diseases this problem is expected to amplify.
• The pharmaceutical industry’s concern is to provide long term expensive treatments. The public can expect few if any cures despite hundreds of millions from charities and the government for research. The toxic nature of long term drug use ensures future disease requiring still more prescription drugs. The FDA is financially supported by the very industry it is supposed to monitor.
  • Effect – The U.S. is the most medicated country in the world paying more than three times the average of all other developed countries. The medical system revolves around expensive patented prescription drug use where health and preventive measures continue to take a backseat to profits has the U.S. ranked near the bottom of developed countries in Healthy life expectancy (HALE).
  • Effect on main street America – Prescription drugs and insurance costs continue to rise. Prescription drug use
    in the population continues to rise increasing the need for more drugs and lowering the populations overall health.

Food production:

• Subsidized food production makes our food cheaper than at any point in human history, but it is processed, refined, genetically modified, and laden with additive levels of salts, sugars, fats, and additive preservatives and other compounds.  Industrialized
  farming is rapidly depleting nutrient value of soil requiring ever more petroleum based fertilizers. Four crops – corn, soy, wheat, and rice make up the bulk of all U.S. food and is becoming largely genetically modified and homogenized lowering crop resilience to disease.
  • Effect – one third of the country is obese and that figure is growing. Consumption of current processed food creates obesity related illness and expensive chronic diseases such as heart disease, stroke, cancer, etc. to rising healthcare costs which drive up the cost of healthcare and contribute to the nations debt.
    • Note – Food profit margins are low. To increase profits it is necessary for the population to consume more food. Obese people generally eat more. While this is good for the food and pharmaceutical profits, this cycle is also contributing significantly to rising healthcare cost which is approaching 2.5T per year. This in turn contributes to national debt as Medicare and Medicaid costs increase.
  • Effect on main street America – Healthcare insurance and prescription drugs become more expensive. Population (including children) are getting more obese and unhealthy (just look around). Increased consumption of addictive processed foods lowers nutrition value necessary to maintain healthy immune system requiring more trips to the doctor and more drugs.

Government:

• Politicians remain in gridlock over what to do about the rising national debt; despite recent posturing and attempts at compromise they remain more concerned with gratifying wealthy contributors’ and getting themselves re-elected. Both parties realize that tax revenues need to increase and spending needs to decrease but lack the political will to challenge party lines, contributors, and special interests.
  • Effect – Raising taxes and / or removing Bush era tax cuts and the cessation of three unproductive wars will be met by considerable resistance from Republicans. Decreasing the size of government and trimming endowment programs (Social Security and Medicare) even if only through efficiency measures will be met with considerable resistance from Democrats.
    The result is ongoing political games and kicking the problem down the road. This is degrading the confidence of international debtors in the U.S. ability to deal with fiscal responsibility causing some to seek out alternatives to the dollar
  • Effect on main street America – If the dollar experiences rapid devaluation inflation severely impacts all but the wealthiest of American families who have less money tospend in the economy. Less spending means prolonged recession.
• Legislation is being determined and in many cases written by lobbyists. Campaign contributions ensure that legislatures will champion contributors causes. Large Multi National Corporations and other special interests view the millions they spend on these endeavors as investments that provide incredible returns. The populace has no organized way of matching or countering these expenditures.
  • Effect – Corporate and special interests are determining the course of the country over the interests of the American people. The more money a group has the more favorable legislation they will receive regardless of the long term outcome for the public. New revolutionary technologies are shelved to protect existing industry profits,
  •  Effect on main street America – Polarization of wealth, stagnate wages, environmental degradation, disenfranchisement, and a loss of faith in government.

The overall effect on our critical sectors if we continue on our current course will be a continuation of the status quo and these unsustainable systems even to the point of collapse in order to protect profits and investor wealth. Our critical sectors are more than profit maximizing engines; they are the foundation of our information age society and are the staple of the lifestyles we are accustomed to. Individual and group selfishness doesn’t have to lead the U.S. into an era of decline. I agree with Warren Buffet – “our best days are ahead of us, perhaps not on this current trajectory.”

It is time to evolve our thinking beyond personal gain and include our fellow man, our communities, and our environments. Capitalism has propelled us to great heights, but current paradigms are now disproportionately benefitting a few to the expense of the overall country, we can make it work for all of us again it just involves a restructuring of the objectives. Those who are benefitting from the current systems can continue to do so, but for many who no longer see the benefits reaped by a few there are other options. In the next blog we will explore a few such options.

In the previous blog, Problems in U.S. Critical Sectors – Monetary & Banking, Energy, Healthcare, Food Production, and Government – An Analysis - the major economic sectors critical to the survival of a modern day society were identified and their long term problems addressed. These sectors include: monetary & banking system, energy production, healthcare, food production, and water distribution. It was also noted that a stable and reliable government free of corruption is necessary to ensure proper legislation and regulation. Finally, it was pointed out that if problems in these sectors remain unresolved they can have serious long term consequences for our economy even changing the lifestyles that all Americans have grown accustomed to.

Problems in these sectors are becoming obvious even to the general public. The causes are numerous but largely reside in a significant resistance to change from those who seek to maintain the status quo. This is understandable since it generates massive profits and wealth. These influentialindividuals and their associated special interests constitute many of our nation’s wealthiest investors and largest Multi National Corporations (MNC’s). They believe they have the expertise, resources, and global exposure necessary to ride out any detrimental scenario the future may bring, but what about the other 99% of Americans? Can they expect to turn to a government which has demonstrated repeatedly a definite lack of political will to realistically deal with any of these concerns? Campaign contributions and the best lobbyists’ money can buy guarantee it otherwise.

The real cause, the one underlying the resistance to change revolves around a new philosophy that has evolved over the past several decades, one that has replaced the American dream of life, liberty, and the pursuit of happiness and redefined what success and achievement means in our society. In truth, this philosophy is not new; it has been with humanity since recorded history. It is a belief system that promotes selfish individual / group gain and achievement over all else, and has little regard for long term public or environmental consequences. In today’s world its mantra is “economic growth at any cost”, and it favors and rewards those who strive for profit maximization, wealth generation, and the influential connections to political power that ensure ongoing control. The cause has many names greed, avarice, selfishness, and mammon – it is the love for money above all other things, and seeks power to ensure that goal. People and resources become numbers on a balance sheet. Decisions to pursue profit and guarantee a return on investment (material wealth) can then be justified and even encouraged despite however much damage may be done.

Since World War 2 the US has experienced massive growth and most Americans have prospered, at least up until recently. Our country came out of World War 2 with an immense manufacturing base due to the war effort, and we were one of the few developed countries not straddled with large scale reconstruction costs. We rapidly became an economic powerhouse with readily available access to natural resources. The pie expanded for all. Now, large MNC’s view the U.S. as a country in its maturity phase, consuming more than it produces, relying on debt that because of fiscal irresponsibility is becoming more restrictive and more difficult to obtain from International debtors. The pie is growing much slower. However, large influential financial institutions, MNC’s, and investor groups still demand increasing profits and substantial returns on their investments in order to meet their growth models and expectations, and they are getting them by any means necessary.

The result of these actions has been a shrinking proportion of “pie” for Main Street America. This is evident by a decade of stagnant wages, a relatively jobless recovery, having to bear the brunt of a financial collapse that bailed out the very players that created it, and a growing polarization of wealth towards the upper 1%. Warren Buffet one of our nation’s most successful investors has stated accurately that the current rising tide is raising only the yachts. To make matters worse large MNC’s are looking towards what they believe are the more profitable growing economies and emerging markets of Asia. We can all sense that something is wrong in our country with our growing debt, increasing inflation, and a lack of faith in our political parties, but we are not sure what we can do.

Einstein declared that it is impossible to solve major problems with the mindset that created them. Yet that is exactly what continues to take place and the result has been a further entrenchment into the very systems causing the problems. Our aforementioned critical sectors are more than just profit maximizing engines for big corporations and the wealthy; they are the required foundations of our modern society.

Maximizing profits and increasing investor wealth are institutions of American capitalism and have helped raise the country to where it is.  But in our critical sectors it is beginning to limit progress and keep the country locked in archaic systems that are not only proving to be unsustainable but could result in a rapid decline of these sectors all at once. While the current paradigms are certainly financially beneficial to a select few, that benefit is not shared with the public. Quite the contrary, Americans are reeling from increasing costs and may soon have to prematurely deal with a tipping point that could result in an economic downturn even more severe than what we recently faced. The reality is that the playing field is no longer fair. Those with wealth and power have too much control over legislation, and that legislation is creating an environment that not only restricts the necessary change in our critical sectors, on a larger scale it is degrading the middle classes.

American’s are now being confronted with the reality that infinite growth and unsustainable debt models do not work in finite systems, and that an increased concentration of wealth into the upper 1% is taking away the very thing that makes America great, opportunity for all. We are allowing the insatiable appetite some have attained for profits and wealth to get the better of us as a nation. It is time for some of us to set aside the desire for personal gain and focus on more important things like fixing our critical sectors.

The greatest teachers and spiritual leaders of our past have all warned us against this type of belief system and what would happen when it is left unchecked.

Jesus Christ said “No man can serve two masters: for either he will hate the one, and love the other: or else he will hold to the one, and despise the other. Ye cannot serve God and mammon.” Meaning that if the love for money is all one is concerned about then all actions regardless of the consequences to others can be justified. Are we not seeing evidence of this today?

The Hindu Avatar, Krishna stated in the Bhagavad Gita – “A person with demoniac tendencies thinks: “So much wealth do I have today, and I will gain more according to my schemes. So much is mine now, and it will increase in the future, more and more”. Buddha said in the Samyutta Nikaya. – “Were there a mountain all made of gold, doubled that would not be enough to satisfy a single man: know this and live accordingly.”

In these passages and many others are references and warnings about the addiction to wealth, how it cannot be satiated, and how we can lose our compassion and the very essence of what makes us human when the desire for personal gain takes over.

Over the next few years the issues facing our society need to be realistically addressed, hopefully by people with the vision and courage to step beyond the selfish profit maximizing goals of today. Our critical systems have for to long only been driven and motivated by personal gain and ambition. Protecting profits and individual wealth is limiting our society’s ability to move beyond the unsustainable systems in our critical sectors. It may be time to assess our current form of capitalism as it applies to our critical sectors and realize that these sectors aren’t sustainable and need to be pulled back to their entrepreneurial roots.

In the next blog, the effects of the current systems in our critical sectors on the American people will be discussed.