2nd Nov 2012

A good documentary about the Californian 3 strikes law, that puts people into prison for life, even for even minor offenses. Not increasing the safety of the population, but just feeding a big money making machine, called the prison industry.

We can just hope that people in California do the right thing and vote for Prop 36, which modifies the law.

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23rd Oct 2012

Income Inequality: the lost century

We already posted about the recent history of income inequality in the US. Lets have a look at the big picture and see what happened about 100 years ago.

Before the industrial revolution social mobility was basically zero and a small group of feudal sovereigns ruled over the mostly peasant population. The only exception was the New World. In Colonial America the 13 colonies formed where more equal than any other place on the planet. Then came the industrial revolution and the income gaps increased tremendously. For example in England the gini coefficient (a measure for income inequality) shot up from 0.4 in 1823 to 0.63 in 1871. However, with the growing industrial workforce came growing political pressure for redistribution and so in the 1880s Germany pioneered with pensions and unemployment insurance. America even changed its constitution to introduce income tax in 1913! In the 1930s the New Deal introduced Social Security, disability and unemployment insurance. Remember, in 1944 the income tax rate was 94% in the US as a reaction to the great depression. Now just think what we are discussing these days…

All this meant that for decades the incomes at the bottom and middle of the income distribution grew faster than at the top. All this changed from the 1980s: deregulation, globalization and the advent of information technology changed the playing field. As a result, the integration of 1.5 billion workers of emerging-countries increased return on capital and made sure the top gained ever more profit on investements, while worker’s wages came under pressure. Simultaneously, the unions got busted.

The national income of the top 1% has now reached again the same level as in 1923. Then and now this can not be sustainable. A lot of the inequality is inefficient and reflects market and government failures that also reduce growth as it is reducing social mobility and future prosperity. It is not only about higher taxes and more handouts, it is about investing in the young for future innovation in a world of global competition.

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18th Oct 2012

This video debate on AlJazeeras stream goes right into the heart of capitalism: consume. We already know, that buying all these things does not make us happy, but still so many are trapped in the viscous cycle of working and buying.

This has brought us to this point were we are unhealthy, unhappy and constantly suffer from economic crisis. Remember, the basis for the housing bubble which has lead to the economic crisis are people who wanted to have those houses they can’t afford. So every time you take a credit for anything you do not actually really need, you are fueling the machine that destroys the economy and your job.

There is actually an easy way out. At least, logically it is very easy. If you consume less, you will be richer. Very simple, if you spend less you will end up with more money. Now if you spend that money more consciously for longer lasting goods, you will actually even seem richer to your peers. So, instead of buying this overpriced fast-food coffee every morning, just make your own. Now use this money, to buy the $100 sweater instead of the $50 one, for example. If you use the bike more often it is not only cheaper, it is also good for your health and even the environment. Buy used stuff, the mobile phone from last year, use car sharing… This list can go forever, and you will see that with buying less stuff you end up with more money, better health and a much better ecological footprint. Moreover, since so many victims constantly buy new stuff, there is a lot of stuff either on sale or barely used for very cheap prices. I bought for example used high-end TV speakers. Do you think anybody could see that they are used? The remote control is still in the plastic wrapping!

Now, with more money in your hands you can actually do things other people can’t. Especially, if you invest it smartly over the years you may just take that vacation you always wanted, afford your kids education without any debt or just retire a few years earlier. Think about it, I would say spending less can actually even increase you social status. Yes, from a capitalistic perspective!

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