The Pie Is Shrinking So Much The 99% Are Beginning To Starve

This report was originally published by Charles Hugh Smith at PeakProsperity

Social movements arise to solve problems of inequality, injustice, exploitation and oppression. In other words, they are solutions to society-wide problems plaguing the many but not the few (i.e. the elites at the top of the wealth-power pyramid).

The basic assumption of social movements is that Utopia is within reach, if only the sources of the problems can be identified and remedied.  Since inequality, injustice, exploitation and oppression arise from the asymmetry of power between the few (the financial and political elites) and the many, the solution is a reduction of the asymmetry; that is a tectonic realignment of the social structure that shifts some power—economic and/or political—from the few to the many.

In some instances, the power asymmetry is between ethnic or gender classes, or economic classes (for example, labor and the owners of capital).

Social movements are characterized by profound conflict because the beneficiaries of the power asymmetry resist the demands for a fairer share of the power and privileges, while those who’ve held the short end of the stick have tired of the asymmetry and refuse to back down.

Two dynamics assist a social, political and economic resolution that transfers power from those with too much power to those with too little power: 1) the engines of the economy have shifted productive capacity definitively in favor of those demanding their fair share of power, and 2) the elites recognize that their resistance to power-sharing invites a less predictable and thus far more dangerous open conflict with forces that have much less to lose and much more to gain.

In other words, ceding 40% of their wealth-power still conserves 60%, while stubborn resistance might trigger a revolution that takes 100% of their wealth-power.

History provides numerous examples of these dynamics.  Once the primary sources of wealth-generation shifted from elite feudal landowners to merchants and industrialists, the wealth (and thus the political power) of the landed elites declined. As the industrialists hired vast numbers of laborers drawn from small farms and workshops, this mass industrialized labor became the source of the wealth generation; after decades of conflict, this labor class gained a significant share of the wealth and political power.

The civil rights and women’s liberation movements realigned the political and economic power of minorities and females more in line with their productive output, reducing the asymmetries of ethnic and gender privileges.

In broad-brush, progressive social movements seek to broaden opportunities and level the playing field by reducing the asymmetric privileges of dominant classes defined by power and privilege.  The core mechanism of this transition is the recognition and granting of universal human rights: the right to vote, the right to equal opportunity, and rights to economic security, i.e. entitlements that are extended universally to all citizens for education, healthcare, old-age pensions and income security.

Again in broad-brush, these movements have largely been categorized as politically Left, though many institutions deemed conservative (for example, various churches) have often provided bedrock support for progressive movements.

Social movements which seek to limit the excesses of state power tend to be categorized as conservative or politically Right, as they seek to realign the asymmetry of power held by the state in favor of the individual, family and the traditional social order.

The Expanding Pie Fueled Expanding Entitlements

Writer Ugo Bardi recently drew another distinction between Left and Right social movements: “Traditionally, the Left has emphasized rights while the Right has emphasized duties.”

As rights manifested as economic entitlements rather than political (civil liberty) entitlements, rights accrue economic costs. As Bardi observes: “Having rights is nicer than having duties, but the problem is that human rights have a cost and that this cost was paid, so far, by fossil fuels. Now that fossil fuels are on their way out, who’s going to pay?”

I would argue that the cost was also paid by higher productivity enabled by the technological, financial and social innovations of the Third Industrial Revolution, roughly speaking the interconnected advances of the second half of the 20^th century.

These advances can be characterized as expanding the economic pie; that is, generating more energy, credit, technological tools, opportunities, security and capital (which includes financial, infrastructural, intellectual and social capital) for all to share in a socio-political-financial allocation broad enough to make everyone feel like they were making some forward progress.

This long-term, secular expansion of the pie naturally generated more demands for additional entitlements and rights, as the economy could clearly support the extra costs of allocating additional wealth and resources to the many.  From the point of view of the few (the elites), their own wealth continued expanding, so there was little resistance to expanding retirement, education and healthcare entitlements.

But in the 21^st century, the expansion of the pie stagnated, and for many, it reversed. Adjusted for real-world inflation many households have seen their net incomes and wealth decline in the past decade.

Despite the endless media rah-rah about “growth” and “recovery,” it is self-evident to anyone who bothers to look beneath the surface of this facile PR that the pie is now shrinking. This dynamic is increasing inequality rather than reducing it.

The Shrinking Pie And Stagnant Productivity

It is a truism of economics that widespread increases in productivity are required to generate equally widespread increases in income and capital, i.e. productive wealth. To the consternation of many, productivity has stagnated since 2010; no wonder household income for all but the upper crust has gone nowhere.

If we glance at a chart of productivity, we see a strong correlation with speculative investment bubbles (the dot-com and housing bubbles 1995-2005) and speculative spikes fueled by central bank monetary stimulus (2009-10).  Absent bubbles and monumental excesses of central bank stimulus, productivity quickly sinks to its secular trend line: downwards.

This next chart depicts the long-term trend line of productivity through all four industrial revolutions. Note the decline concurrent with the 4^th Industrial Revolution (mobile telephony, the Internet, AI, robotics, peer-to-peer networks, etc.) and the depletion of cheap-to-access-and-refine oil:

The unwelcome reality is that the economy is changing in fundamental ways that cannot be reversed with policy tweaks, protests or wishful thinking.

Consider the percentage of the gross domestic product (GDP) that goes to employee compensation (wages and salaried). Labor’s share of the GDP has been in a downtrend since 1970, which not coincidentally was the peak of secular productivity:

In this below chart of the distribution of wealth in the U.S., we find the same correlation to the downtrends in productivity and labor’s share of the economy.  The bottom 90% of households’ (the many) share of the wealth pie topped out in the early 1980s and has declined precipitously since, while the wealth of the top 0.1% (the few) has more than tripled since the late 1970s:

This next chart depicts the remarkable (and recent) spike income growth the few have recently enjoyed, at the expense of everyone else:

The increase in wealth and income inequality and the decline of productivity and labor’s share of GDP are the result of structural changes in the economy, changes with far-reaching consequences.

While it’s appealing to identify policies endorsed by self-serving insiders and elites as the source of these changes, that is far from the whole story. Much of this growing asymmetry stems from profound changes in the global economy that depreciate labor (as conventional labor is no longer scarce) and increase the gains of the top few in a “winner take most” allocation that benefits speculation, leverage and new ways of organizing labor and capital that reward the organizers far more than the users/participants.

In this new era of a steadily shrinking pie, the sources of inequality and related social problems have also shifted.  As a result, the social movements that were effective in the past are no longer effective today. Attempts to address rising inequality with the old tools are fueling frustration rather than actual solutions.

In Part 2 — Social Unrest: The Boiling-Over Point, we examine why our existing models for social change have slipped into ineffectual symbolic gestures that fuel fragmentation and frustration — and why that will lead to a dangerous boiling over of the 99% against the elites controlling the system.

When that happens (and it seems inevitable at our current trajectory), the rending of our social fabric will happen stunningly fast. The ensuing social disunity and disruption will be of the sort many alive today have never seen.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

The End Of The Age Of Benevolence

Authored by Francis Marion of CanadianGunBlog.com, via Jim Quinn"s Burning Platform blog,

The history of democracy, Marxism and feminism is the history of the snake, which, being hungry for more, stalks its own tail and consumes itself.

Some evenings I sit on the sofa in the family room with my teenage daughter and watch a TV program with her. I leave the choice of the show to her, it matters little to me, and when she finds something she likes she sits next to me, puts her head on my shoulder, and snuggles up for the hour it takes to watch whatever it is she’s chosen.

It’s our time.

Occasionally we’ll sneak in another twenty or thirty minutes to the objection of her mother but I like my time with her so I put up with the raised eyebrows and the, “She’s got school tomorrow,” scoldings. It’s important to me that she knows I love her, that I want to spend time with her and that she feels safe when she is with me. Someday, when she is a grown woman I want her to find a man that will take care of her and protect her like I do. I expect no less from a suitor and neither should she.

There will be women who read this who will object to my stance. They will say, “She doesn’t need a man to feel safe or validated or content,” but I would disagree. When she gets older she’ll need a good man, not just any man, and that’s as true today as much as it was ten years, twenty years, fifty years, one hundred years and even one thousand years ago. And it will become even more so as time goes on.

Indeed, we have reached peak denial in our civilization and whether we like it or not reality is about to make a come back.

The freedom that we have enjoyed in the west and the modern democracies that have sprung forth from our evolving and enlightened philosophies over the past few hundred years are not a given. Granted, they are preferable outcomes given our natural state but politically speaking they are an anomaly in the history of mankind and not the norm.

As such, democracy and the systems, social structures and institutions that have grown up around them are grossly misunderstood by the vast majority of the western world. Most of the people living in the west today have been raised to believe that democracy is a moral system of governance and that it is our gift to the rest of mankind. But democracy is not an inherently moral system nor is it a guarantor of linear, progressive political growth.

At its root democracy is quite simple. It is the exercise of political power by the majority over the minority. It is the power to choose in matters of politics. This, of course, begs the question: to choose what?

Since choices in general (and political ones are no exception) can be either good or bad, in this case, both for the individual and the body politic, then it follows that democracy is neither. It is nothing more than a tool for decision making where the majority holds the power to make decisions that affect everyone, either for better or for worse. Democracy is, therefore, a reflection of the character of the people who exercise it.

Additionally, democracy is also the use of soft force. That is, the minority bends to the will of the majority on political matters and the apparatus of the state is responsible for carrying out its demands. The minority consents, willingly or unwillingly not because violence is present but because, by the state’s presence, it is implied.

More importantly, though, democracy is a luxury that is preceded by benevolence but does not necessarily guarantee its continuance or creation if forgotten.

Societies in a state of internal turmoil, or where competing factions vie for political power, often through the use of overt physical violence, will forgo democracy because the primary component for its exercise, order, is absent.

Democracy in the western world has always followed ‘order’. ‘Order’ is a byproduct of force and, like democracy varies in severity on the scale of good and bad, its moral leanings by and large being dependent on the type of people who impose it from the top down. It can be fatherly and benevolent or it can be violent and oppressive. It is never universally both.

Thus democracy usually occurs where ‘order’ has been established and the apparatus of the state is at least somewhat benevolent.

In a political world ruled by strength, order and benevolence are precursors to suffrage. Without either suffrage would not exist, choices would be limited and brute strength would still be the order of the day.

Whether feminists are willing to admit it or not, brute, physical strength is at the root of all political power, thus feminism came into being because those who held that strength chose to exercise benevolence and reason over strength and subjugation. Their suffrage was dependent first and foremost on the benevolence of those who held political power. And like it or not, those who held political power at the time it was introduced were men.

As time progressed, at least in the West, democracy, and universal suffrage gave way to both physical and intellectual freedom for women. In the West during the twentieth century, its political structure (and the intellectual values it embodied) and the industrial revolution it spawned ushered in a new era for women, giving them choices they had not previously had, by and large, since the beginning of recorded history.

Women were finally free to choose between family, career or both. Rather than playing the role of the weaker, subservient sex women found their place beside men in society as intellectual equals. Physical strength was no longer a factor in the social structure of our civilization. An intellectual meritocracy came to be valued over a system based simply on brute force. This structure was the product of order created from benevolent strength.

But the rise of Marxism and feminism, particularly the rise of third-wave feminism has put ‘order’ at risk.

Without order, an intellectual meritocracy will once again become subservient to strength. It’s a hard pill for women and progressive liberals in general to swallow but it’s a fact.

Marxism and modern feminism work continuously towards a perfect world but ignore reality in the process. They forget an important lesson, born true repeatedly throughout history:

There is no utopia.

The best we can hope for in any civilization is for a society to be built and based on fundamental individual rights and freedoms. If we refuse this then we return to what we were before. This means rule by brute force which means the end of political and legal equality for women and the death of democracy itself.

The irony in the dilemma which the West now faces is that our demise, the continual erosion of a democratic, intellectual meritocracy, is by and large spurred on by the very people that our system was created to protect.

Feminists, both female and male, cry daily for more of the same poison which infects us.

More illegal and unscreened immigration. More tolerance of philosophies which are intolerant themselves. More invitations for an enemy created by a corrupt and immoral government to ignore our borders and live among us.

More cries for moral nihilism, the repression of speech (one of the cornerstones of their own suffrage) and the denial of fundamental biological reality.

More cries for the denial of basic math and the continuance of government-sponsored bread and circuses. More of everything which our civilization cannot sustain. More of everything which rots us from the core.

Subsequently, modern feminists decry the men of their own civilization as misogynists, racists, and intolerant while forgetting it was their own men who recognized that a society built on equal political rights for all was preferable to a society built on spoils taken by the strong.

They forget that it was the men they live among who valued justice over greed and force so much that they shed the old ways and took their place beside their women instead of in front of them. They do all of this while cheering on the invasion of their own countries by foreign men who view them as nothing more than chattel property. In doing so they have unwittingly invited the destruction of their own freedom.

While I sit next to my daughter I wonder what the future will hold for her. I have no desire to see her disenfranchised but the reality is that many of her own kind have chosen a future where reason has been rejected and instead, traded for thirty pieces of silver and whatever makes them feel good. Unfortunately, a world without reason is a world without order which is a world without choice. A world without choice is a world of brute force. And that’s a man’s world.

Ironic.

Benevolence and democracy should have ushered in an era of truth and reason but instead, they ushered in an era of denial and wishful thinking. Thus, democracy’s beginning will also be its end. What came from force will return to it.

For those of you paying attention and who can see the contradictions and the resultant decay, pray. Pray that what comes afterward will once again be benevolent.

Sales To "Common Sense Preppers" Soar Amid Nukes, Quakes, Floods, & Storms

With North Korea threatening to detonate a nuclear weapon over the Pacific Ocean as its leader and President Donald Trump casually bandy about threats of thermonuclear annihilation, people in the US and Japan are understandably starting to worry.

After all, US intelligence agencies revealed during the summer that they believe the North will soon possess a nuclear warhead-tipped ballistic missile capable of striking most of the continental US. In fact, chances are good that, with a little luck, the North already has missiles in its arsenal that could probably strike a large area of the western US.

But, aside from nuclear threats looming in North Korea and Iran, the worst hurricane season in the Atlantic in more than a decade, and the continuing rumblings underneath the Yellowstone caldera, which could signal a potentially humanity-extinguishing eruption, it’s understandable that Americans and Japanese are increasingly worrying about their safety, and have begun purchasing more “doomsday preparation” gear to help assuage those fears.

Now, Reuters is reporting that survivalists across the US are clearing store shelves to stock bunkers in anticipation of Earth’s final chapter. A few survivalists who spoke with Reuters said that North Korea’s threats, and the images of the destruction caused by Hurricanes Harvey, Maria and Irma, have inspired them to stock up.

“It’s been a very busy six or seven weeks here - sales tripled practically overnight,” said Keith Bansemer, vice president for marketing for Idaho-based My Patriot Supply, an online store catering to preppper needs.

“It all started when North Korea shot the missile that was capable of reaching the U.S. Then the hurricanes and two Mexican earthquakes increased sales from California and Cascadia in the Northwest,” he said, referring to the corner of the country where many survivalists have settled because of its relative isolation.

One guy on the west coast said he’s worried about a catastrophic earthquake. He has piled enough survival supplies in a closet that could last he, his wife and their dogs for a month, if necessary.

David Yellin, a self-described prepper who lives in California’s San Diego County, said his main concern was the long-expected “big earthquake” along the West Coast.

The 31-year-old police officer has piled enough survival supplies in a closet of the apartment he shares with his fiance and their two dogs to allow them to hunker down for a month.

“I‘m more of what I consider a common sense prepper,” Yellin said. “Because at the end of the day, we are responsible for our own safety.”

Both he and his wife have “bug out bags” prepared should disaster strike.

If disaster forces the couple to flee, each has a “bug-out bag” stuffed with three days of food, water, first aid and water purification supplies, fire-starting materials, a tent and sleeping bag, change of clothes and important documents.

One purveyor of survivalist gear said sales on items like gas masks have spiked over the last two months, a period which notably featured the US’s escalating war of words with North Korea and the catastrophic hurricanes.

At Ready To Go Survival, founder and chief executive Roman Zrazhevskiy said gas masks were quickly moving off the shelves and overall sales “are up like 700 percent over the last two months.”

A prepper himself, he said his greatest fear was a U.S. economic collapse as a result of the country’s unsustainable debt.

“Once people go hungry, they are going to get to the streets and look for food,” said Zrazhevskiy, 31, who grew up in New York City’s borough of Brooklyn and now lives in Texas.

Customers were snapping up $500 CBRN suits to withstand chemical, biological, radiological and nuclear attack and $200 gas masks in sizes that fit children as young as 5.

Another prepper who has spent thousands of dollars on gear said he fears political and economic collapses as much or more than North Korea.

“Gas masks? I’ve got tons of those,” said prepper Jerry McMullin, 62, a retired risk assessment analyst whose bunker-like home in Yellow Jacket, Colorado, was built to withstand nuclear attack, biological warfare and a range of natural cataclysms.

Although North Korea is one of his biggest concerns, McMullin is also worried about political instability in Washington leading to riots and mayhem in the cities, he said.

“I‘m not a paranoid guy. I just want to be in a position that when it does go to Hell, I‘m in a good location to get whatever I need,” said McMullin, who has his own water filtration system and burns his own trash in his solar-powered home.

In addition to the obvious threats, many continue to believe in “doomsday" hoaxes like 7/7/2007 and end of the Mayan calendar on Dec. 21, 2012.

Now, some Christians are touting a Bible prophecy that marks September 23, 2017 as the beginning of a seven-year period of catastrophic events that will bring humanity to its knees.

David Meade, a Christian numerologist and author, has said that, based on the Book of Revelations, a constellation would appear over Jerusalem on Saturday that would start the seven years of mayhem.

But McMullin said his own respect for Bible prophesy assures him that disaster is not around the corner.

“As far as getting wiped out this weekend, I‘m not too worried about that,” McMullin said.

“Maybe it’s a timeline marker and things are going to start getting really ramped up. We are not about to go through mass destruction and fatality. I think people are a little more stable - except for Kim,” he said, referring to North Korea’s President Kim Jong Un.

After spending thousands on gear, some preppers told Reuters that the flooding in Houston, Florida and Puerto Rico have left them feeling vindicated.

We imagine that feeling will persist as economic and political tensions, coupled with the impending economic disenfranchisement of much of America’s working and middle classes, continue to simmer, while the US’s leaders continue to risk an unparalleled disaster by trading threats with unstable North Korea.