The Book is Finally Out!


That’s right, I finally finished the book and released it on CreateSpace today!

Book Cover

BUY NOW!

Four years of research, Six months of writing comes down to this.  I can’t afford the ShamWow guy to help me promote it so this will have to do… 

Follow the link above and get you’re copy today, only $12.95!

The Year That Was, Part Three


When I started counting down my top posts from 2012 this one surprised me the most.  It’s the least topical and by far the most economic theory I’ve ever posted but someone it clocks in at number 3 on my list of the top 5 most viewed posts of 2012.

Late last winter while researching economic theory for my Meekonomics book I came across the work of a little known Italian economist named Vilfredo Pareto.  At least I thought Pareto was fairly obscure, I’d never heard of him before.  But the more I read about him the more his theories, originally published over one hundred years ago made a lot of sence to me.  As a result, what came be known as Pareto Efficiency has become a fairly significant peice of my other theories outlining Meekonomics. 

On March 30 I posted the following summarly of Pareto Efficiency, to date it has been viewed 57 times.  I hope you enjoy it…

Pareto Efficency and Income Redistribution

Democracy in a Pareto Efficient Economy


It has been said that Democracy is the worst form of government except all those other forms that have been tried from time to time.  – Winston Churchill

What is the point of democracy?  Is it majority rule?  Is fifty percent plus one good enough to make binding decisions that affect the whole?  What if the majority opinion is wrong? 

Winston Churchill, one of the greatest statesmen of the 20th century knew that while democracy is the best form of government we have available to us right now he wasn’t naïve to the truth that it is hugely flawed.  Simple majority rule democracy often leads to bad decisions, short sited decisions and uneducated decisions.

In recent years it has become clear that democracy, especially in the west, is easily manipulated.   When the powerful and the elite exert control over information, hide or manipulate facts and limit the amount or type of information that is available to the masses, decisions are made on incomplete and faulty information and democracy suffers. 

One of the most alarming trends that I have observed along this line is the marginalization and outright demonization of scientists in the area of climate change.  Never before in history has a good education been used as a negative point against people but there are circles were an elite education is actually now a source of suspicion.  How messed up is that?

The powerful fossil fuel lobby that profits from hiding the truth about climate change has spent billions of dollars seeking out and funding a small group of scientists to refute the claims of the overwhelming majority who agree that the earth is getting hotter.  None of these so called scientist is connected with any of the top universities, but instead they are all connected to privately funded foundations that rely on money from the vary industry they support.  Through intense lobbying this junk science has gained the ear of the so called democratic governments to the point that even thought the majority of citizens agree that global warming is a problem our governments are doing nothing about it. 

I’m reminded of a joke my Dentist told me in reference to the old advertisements that said four out of five dentists agree that brushing with fluoride twice a day helps prevent cavities.  He said, “Four out of five dentists think that fifth guy is an idiot!”

This isn’t about climate change or dentists that don’t think it is a good idea to brush your teeth, this is about the flaws of democracy.  It is about what should happen if that one dentist was actually right? 

Winston Churchill was right; the best form of government is not a simple democracy.  It is a government that seeks to build consensus and isn’t afraid to overrule the majority for the sake of a greater good.   In short the best form of government is a benevolent dictatorship. 

 There is no good example of a benevolent dictatorship in the world today.  Many of the European monarchies of old tried and the Roman Catholic Church to a great extent is still trying.  But they failed.  They failed for the same reason that democracy fails today.  They failed because the wealthy and the powerful used their influence to overshadow the facts and manipulate the leaders into doing things that are not in the best interest of the masses.

I’ve been writing a lot lately about our Pareto Efficient economy.  I believe that our society is approaching a point of balance that is going to make it extremely difficult for people at the bottom of the pyramid to move up without the necessity for people above them to move down.    We are still being fed the lie that a rising tide floats all boats, when in reality the tide isn’t rising at all; the yachts are just displacing more water.   

A democracy that allows a disproportionate amount of power and influence to be exerted by people at the top of the pyramid will never achieve true balance.  Notice I did not say equality, I don’t think that is a viable option either.   A balanced economy doesn’t necessarily have to be an equal economy but it certainly can’t be a lopsided economy either.  I am afraid that as more and more people on the bottom realize this they will revolt and result will be collapse of the entire system. 

We are the in the midst of an information age that has brought us to the verge of a new enlightenment.  The last enlightenment was marred by revolution and war and ended with the near Armageddon of World War One.   With weapons of mass destruction in the hands of rogue states and crazed fanatics I shudder to think about the kinds of violence this new enlightenment might bring.

Pareto Efficiency and Income Redistribution


 

This is a continuation of my last post when I introduced the economic concept of Pareto Efficiency. 

It is my assertion at our globalized economy is approaching the point at which it is no longer possible for one person to improve their lot in life without the necessity for someone, somewhere to lose ground.  That is the classical definition of Pareto Efficiency as coined by Italian economist Vilfredo Pareto in the 19th century.

Nothing raises the ire of right wing politicians and economists more than the notion of income redistribution.  “Communism!” they scream and point to the failed economies of the former Soviet Bloc, without realizing that the totalitarian Stalinist form of communism that gained influence in the latter half of the 20th century had about as much to do with the original ideas of Karl Marx as the NFL has to do with FIFA.  True Marxism was extremely democratic and goes beyond mere majority rule to the point of consensus.  Karl Marx himself famously declared;

“I do not know communism, but a social philosophy which has as its aim the defense of the oppressed cannot be condemned so lightly.”

That doesn’t sound much like Stalinism to me!  But I digress…

Before I go any further it must be noted that a discussion of Pareto Efficiency is not a moral one.  Pareto Efficiency is a mathematical concept and is about as moral is 2+2.  The fact that we are approaching Pareto Efficiency on a global scale assumes no moral imperative but it does have huge moral consequences.

The right wing argument is that if we force the wealthy, through taxation to give up some of their income to help the less fortunate the loss at the top of the ladder will be far greater than the gain at the bottom and there will be no incentive for those that at the bottom to strive for something better.  But as our economy approaches Pareto Efficiency the lie of that argument is exposed. The fact is that in a Pareto Efficient economy everyone, the wealthy and the poor, must run faster and work harder just to stay in the same place and the only way you move up is if somebody moves down.  Our resources are finite so for one to have more, someone must end up with less.    

In short the only way for the poor to move up is through some form of income redistribution.    That’s not communism and it’s not capitalism, it’s just first grade math.   2+2 =4 but so does 1+3 and 3+1.  Not to belabor the point but if 4 is all there is and you have 3, the only way for this to equal out is for someone to only have 1.   If the person with 1 wants 2 the only way for that to happen is for you to give it to him.

So where am I going with this? 

Honestly, I don’t know.  Since the Arab spring and the occupy movement of 2011 hardly a day goes by when we don’t hear about growing income inequality.  In my humble opinion that’s because the so called free market no longer works in a world that has reached Pareto Efficiency.  I don’t have any solutions.  All I know is that the rich need the poor to buy their goods and the poor need the rich to keep producing.  We are locked in a sort of symbiotic relationship and if we are to avoid conflict we need to recognize the situation for what it is.

 I’m not naïve to the fact that we will never reach true income equality.  I don’t believe that is any more practical or sustainable than a world in which 1% percent of the population controls 99% of the wealth.  But I am also not naïve to the fact that what we have now is nothing more than a giant pyramid scheme and we all know what happens to a pyramid once the people at the bottom figure out they’ve been duped.