Did Globalization cause Brexit?

Reposted from JohnBrianShannon.com

“The measure of a society is found in how they treat their weakest and most helpless citizens.” — former President of the United States, Jimmy Carter

And in the UK, the vote on that was June 23rd. The result is there for all the world to see.

Had a mentally disturbed man not gunned down MP Jo Cox, the Brexit win might’ve been 70 percent.

Regardless, 52 percent of Britons said EU membership isn’t working for them, in one way or another.

And this is the whole point; If you’re a 1-percenter or an elite, the EU is a truly wonderful place to live. I’d have to call it an ‘unparalleled’ existence, living in historic Europe, beautiful Europe, a continent full of amazing cultures and such technological prowess and so much more(!) that it would take a year-long video presentation just to cover the basics.

But if you’re a ‘working stiff’ it’s not so good.

Did Globalization cause Brexit?
Did Globalization cause Brexit? Vote Leave supporters hold Union flags in Westminster after Britain voted to leave on the European Union in London, Britain, June 24, 2016. REUTERS/Toby Melville

OF COURSE the economic problems in the EU and other Western nations are globalization-induced. It’s so apparent it’s beyond all argument.

Fully half of the Brexiters angst could be traced or blamed on the follow-on effects of globalization.

That doesn’t give the EU governance architecture a ‘free pass’ however — on the contrary — the EU is one of the main ‘pushers’ of the globalization drug, and with that (good) drug come the (negative) side-effects;

Which are; the offshoring of jobs, higher unemployment, more competition for jobs, massive immigration / ghettoization, higher crime rates, higher societal costs (including, but not limited to; policing, court, incarceration, property damage, and intangibles like ‘how safe’ citizens feel in their own city) also higher traffic flows in airports / shipping ports / highways / and in cities — all of which suddenly require massive upgrades to handle the increased traffic. And so much more than that short list.

I’m the first to agree that the thing we call globalization is a truly wonderful and great thing! But the job is only half-done.

Globalization has created a permanent poor class (whose jobs were shipped to Asia, and many remaining jobs were taken by economic immigrants) a situation which has yet to be properly addressed in the EU.

When a society isn’t working for 2/5ths of the citizens, it isn’t working. Period. Full stop. Until the day it’s rectified.

And that’s what I’m hoping for. I’m waiting for the mandarins in Brussels (who can’t be fired by ‘The People’ because they’re unelected) to begin to address the shortcomings of their governance architecture — of which globalization is a major platform.

They should’ve been proactive all along, instead of spending hundreds of thousands of person-hours on what ingredients bread may, or may not have. (How ‘Soviet’ of them)

It’s difficult to believe that some people can’t understand Britons voting for Brexit.

  • Either the EU must begin holding elections for their highest officials (to allow ‘The People’ a chance to ‘vent’ when things aren’t going well) instead of choosing to exit the EU,
  • OR
  • the unelected mandarins must begin to address the negative aspects of globalization for the bottom two economic quintiles (2/5ths) of the EU’s citizenry.

Otherwise, the whole thing will eventually fail — with nations continuing to join the EU, but more leaving than joining.

Were a similar referendum to the UK referendum held in every EU nation next week, I’d expect that 52 percent (or more) of EU citizens would vote to exit the European Union.

And that would be a crying shame. But it wouldn’t stop it from occurring.

There are few who support the European project as sincerely as I, but there comes a time when we must be candid about successes (many) and failures (only two; But causing two other failures, for a grand total of four failures) and with more failures likely.

The failure to address the;
(1) negative aspects of globalization, is caused by;
(2) a democratic deficit in Brussels, which caused;
(3) Swiss citizens to reject EU membership in 2014, and;
(4) British citizens to vote Brexit in 2016.

Stay tuned for more such failures — and all of it will be on account of the democratic deficit of the eurocrats and their failure to address the negative aspects of globalization.

It’s not the EU’s fault, but it is the EU’s problem. And it needs solving, ASAP.

by John Brian Shannon 

Guaranteed Incomes vs. Job Sharing Schemes

Reposted from JohnBrianShannon.com

Job Sharing or Guaranteed Basic Income?

Poverty reduction programmes can appear in several different forms. Today we discuss the differences between Job Sharing and Guaranteed Basic Income.

PART I – Guaranteed Basic Income

The Guaranteed Basic Income (GBI) or Unconditional Basic Income (UBI) schemes that have been proposed in recent years that are designed to mitigate poverty — poverty that is mostly caused by higher unemployment due to economic downturn or from humans being replaced by robotics, or a combination of both — have been contrived as if they were made to fail the smell test for voters asked to vote on such initiatives.

For instance, the recent Swiss referendum asked Swiss citizens to vote on a Unconditional Basic Income equivalent to $30,300/yr for every citizen, working or not. How ludicrous! (Even I, a UBI supporter would’ve voted against that!)

Of course, all that extra income would be taxable and it would boost an individual’s income into a much higher tax bracket, and consequently, all Swiss taxpayers would pay more tax. However, in addition to automatically being bumped into a higher taxation bracket, the Swiss were looking at major percentage increases to their tax rate in order to afford that exorbitant UBI programme.

However, if such guaranteed income schemes are kept within a reasonable context it suddenly becomes much easier to afford.

Using Canada as an example; Working people who earn any amount over the official poverty line in Canada (approx. $19,000/yr, depending if you live in a rural area or a city) might not require a Guaranteed Basic Income.

But for those senior citizens and disabled people who live under the poverty line, and for hundreds of thousands of Canadians whose jobs were shipped off to Asia (and we know those jobs are never coming back) whose unemployment insurance benefits have run out and are subsisting on various welfare programmes, all of these people now find themselves living far below the poverty line at $7320 per year in certain provinces.

And we wonder why we have homelessness, substance abuse, high property crime rates and higher policing, court, and incarceration costs.

Using the $19,000/yr poverty line threshold as it relates to guaranteed income schemes, we can see how GBI measures up with the real world. (Note: $19,000/year divided by 12 months = $1533/month)

It’s actually cheaper to pay a person $1533/month, than it is to incarcerate them at $6600/month. (The incarceration costs only average $80,000/yr in Canada — with federal prison inmates costing $113,880/yr. per inmate, and provincial prison inmates costing from $48,000/yr to $58,000/yr per inmate)

It’s also cheaper to pay a person $1533/month, than the common $1,000,000 per person (for example) property damage, policing costs, court costs, and incarceration costs, once all the disparate costs of one repeat offender are totalled up. (Some criminal investigations cost hundreds of thousands of dollars per month and may involve many officers and several government agencies)

It’s cheaper to pay a person $1533/month, than it is to hospitalize them in various Emergency Rooms each time they overdose on street drugs, or get hypothermia from sleeping outdoors.

ER costs are astronomical and range from $260. to $8120. per visit (and costs rise significantly if additional testing is required such as MRI, X-Rays, or if there are complications) and a substance abuser who lives on the street in a violent area might have many Hospital visits per month.

And particularly with vulnerable people like seniors or battered women with young children in tow, who subsist far below the poverty line, it is cheaper to pay a person $1533/month, than picking up the pieces afterward.

By rolling existing social programme spending from many different government departments into a GBI, much of the $1533/month GBI is already funded.

And by dramatically lowering property damage, policing costs, court costs, incarceration costs, and Emergency Room and other healthcare costs, a reasonable GBI can facilitate huge net savings for any jurisdiction.

Do dramatically lower homelessness rates, crime rates, lower substance abuse rates, lower policing costs, court costs, incarceration costs, safer cities, lower healthcare spending and shorter ER wait times, appeal to you?

Then, de facto, you’re a GBI supporter! Surprised?


Job Sharing or Guaranteed Basic Income

Guaranteed Basic Income: Dauphin, Manitoba was the site of the Mincome Project in the 1970s. Canada’s policy context concerning basic income may be surprising for some people. The famous Mincome experiment ended abruptly due to a newly-elected government and not due to any failings of the programme; it’s only recently that we’ve learned about the wide extent of its benefits. Photo Dauphin Economic Development on Facebook

PART II

That said; There is nothing that a national (and effective) job sharing scheme can’t fix in regards to high unemployment levels, regardless of how high the unemployment rate soars.

I’m a firm proponent of GBI or UBI and I will strongly support it, in the absence of an effective job sharing programme — which should be our highest priority.

In Sweden, they have mandatory job sharing. Which means that by law, every worker must work for a minimum of 6 months per year.

That’s right, everyone who is not a student, not retired, not on maternity / paternity leave, or not disabled, is classed as a worker and must work a minimum of 6 months per year.

Sometimes, two people share the same job their entire career. Don’t forget that in Sweden, people are mostly employed. It’s the rare person who doesn’t work full time, at least 11 months of the year.

Which means that the unemployment rate among workers would sit at virtually zero percent, EXCEPT for those people who’ve just graduated and are looking for work, or homemakers who’ve just re-entered the job market, or those who’ve relocated with a spouse to a different city in Sweden. (The historical unemployment rate in Sweden is 2.5% which neatly matches-up with my above statement)


In Sweden, there are two unemployment insurance (UI) schemes:

  1. One is the government unemployment insurance plan which pays laid-off workers 66% of their normal salary (most countries have this basic UI setup)
  2. The other is a public / private insurer that workers can voluntarily pay into that allows them to purchase additional unemployment insurance coverage.

Both the government unemployment insurance scheme and the public/private unemployment insurance scheme are money-makers! (And why not?)

For the equivalent of only one or two pennies per dollar earned, workers can purchase the additional unemployment insurance from the public / private insurer — so that during their layoff they receive the normal 66% of their salary from the government unemployment insurance scheme — but also receive up to 33% of their normal salary from their public / private unemployment insurance.

When Swedes get a layoff notice, it’s not a traumatic event in their lives.

From the first day of layoff, they’re on a fully-funded unemployment insurance program that pays them up to 99% of their normal wages, and with no application process nor waiting period. It’s automatic.

It depends upon how much additional coverage they’ve purchased, most people only purchase an additional 24% coverage, giving them 66% + 24% = 90% of their normal salary.

Why don’t they buy 33% coverage?

Because they no longer have commuting expenses, work clothing expenses, and other work-related expenses. It’s actually a net benefit to purchase only 24% coverage. But it’s completely their call to purchase any amount of public / private insurance that they want.

In Sweden, workers don’t need GBI or UBI — as they’re either working, or receiving government unemployment insurance plus the public / private unemployment insurance they’ve purchased themselves.

Companies in Sweden like this arrangement as they always have a large pool of fully-trained workers from which to choose.

Also, in the case of an ill or injured worker, Swedish companies simply call-in one of their unemployeds to fill-in for the injured worker — at full pay.

Workers gladly accept this, as not only do they continue to receive their unemployment insurance benefits (both the government UI which is paid monthly and the public/private UI which is paid weekly) but they also get the daily wage from the employer for as many days as they’re required to fill-in for the injured worker.

Yes. As you might expect, there’s a waiting list! The most senior people are at the top of the ‘Do Call’ List, whenever another employee has time away from work for illness.

It’s a great thing for companies, for workers, and for those trying to raise young families in uncertain economic times.

In Sweden, if you’re a worker, you’re covered! No matter what.

Either you’re at work getting 100% of your normal salary — or you’re at home getting (typically) 90% of your salary. There is no ‘other’ category for workers in Sweden.

And throughout your entire career, you will be in one of those two categories.

If you think that workers and their families like that system, you should interview the companies. They like it even more.

In Sweden, Nobody Sleeps in Dumpsters. Now you know why!


Which approach do you favour?

Do you think that people should be saved from poverty via (1) a GBI system or (2) do you think that an efficient job sharing programme with both government and public/private unemployment insurance is the answer?

by John Brian Shannon


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The Politics of ‘Out’

Reposted from JohnBrianShannon.com

The 1 percent are already ‘In’ and for obvious reasons. Now, what about the 99 percent?

Widespread dissatisfaction among very large numbers of people is manifesting itself in various ways around the world.

We’ve seen it in politics, in regards to the Occupy Wall Street protests, the Scottish referendum, the Arab Spring, Syrian uprising, in the deepening distrust of globalization and free-trade agreements, lower voter turnouts, and most recently, in the Swiss referendum in 2014 to not join the European Union, in the recent Brexit referendum result, and in the potential for ‘Grexit’ from the European Union.

But it wasn’t always that way. In the postwar world, people from all walks of life and in every country ‘pulled together’ towards a common and better future. Sure, the Cold War interrupted that mood. But in the broadest possible context, the Cold War served to sharpen competition and increase the overall flow towards a better civilization.

When the Cold War ended, Earth’s then-population of 6 billion took a collective deep breath and said; “Now we can get somewhere!” — in regards to creating the kind of world anyone would be proud to live in.

But 26 years on, we have fallen massively short of those aspirations. And it’s becoming more apparent and it is grating on people, moreso with each passing year.

The 1 percent

Politics: In 2016, the richest 1 percent will own more wealth than the rest of humanity combined. Image courtesy of Oxfam International

Instead of a giant leap forward for the human race, we had trillion dollar wars in Iraq and Afghanistan that were based on falsehood (the U.S. Iraq Study Group said so) a major recession caused by the unethical and perhaps illegal actions of ‘too big to fail’ financial institutions (but only one person has gone to prison) we had democratic voices being dragged away from peaceful and legal #OWS rallies, we have dangerous people trying to re-ignite the Cold War because it used to be good for the military-industrial-complex economy (so why not try that again?) we suddenly have a 1 percent cohort that owns more than HALF of the world’s wealth (by 2030 they will own 76% of the world’s wealth if measures aren’t taken) we have more outsourcing of jobs (and therefore a larger proportion of low-paying jobs) and we have unelected, elitist, bureaucrats in Europe telling the rest of the continent where to go and what to do.

And that isn’t the half of it.

“It is time for the global leaders of modern capitalism, in addition to our politicians, to work to change the system to make it more inclusive, more equitable and more sustainable.  

Extreme inequality isn’t just a moral wrong. It undermines economic growth and it threatens the private sector’s bottom line.  All those gathering at Davos who want a stable and prosperous world should make tackling inequality a top priority.” 

Lady Lynn Forester de Rothschild, Chief Executive Officer of E.L. Rothschild and chairman of the Coalition for Inclusive Capitalism, who spoke at a joint Oxfam-University of Oxford event on inequality in 2015

(So far, not a single recommendation has been implemented)

Consequently millions of people are losing faith in and blaming globalization when in fact globalization isn’t the problem.

Twenty-six years after the Cold War has ended, our civilization is so much less than it could be that it boggles the mind.

The 1 percenters and their acolytes can’t understand what all the fuss is about.

And I understand that! Their lives are so far removed from reality that; Let the peasants eat cake.” doesn’t begin to describe the disconnect they have with the other 7.2 billion people on the planet.

(For the record, none of it was caused by the 1 percent — they are merely the beneficiaries of the trickle-up economy — therefore, we can never blame them for the problems of the 99 percent)

Ongoing troubles with Russia, China, #OWS, the global economy, Brexit, etc. are just the beginning of our problems. Five years out and ten years out, we will look back longingly to the 2010-2016 timeframe where we had these relatively minor problems to contend with!

We need a new global vision, one that is orders of magnitude better than the present mediocre vision, so that 7.2 billion people will say to themselves, Now this; I can support and work diligently towards.”

The present vision of; Let’s keep making corporations and the 1 percent richer and richer at our expense, getting into conflicts with Russia and China for no reason good enough to justify the risks involved, and unelected and elitist technocrats ruling the Earth (seems to be a growing trend) all so that we can feel grateful to have a low-paying job and a declining middle class?

That’s not a vision! That’s the path to economic suicide!

While there won’t be revolutions there is likely to be widespread voter dissatisfaction and a much lower level of ‘buy-in’ to our civilization from everyday citizens. That alone, is enough to cause irreparable damage to our world.

Everyone has a different idea about why the former Soviet Union failed;

Some say it was the sudden drop in oil prices (not really, that was merely the straw that broke the camel’s back) some say it was Western plots (slight attribution there) while some said its fall was due to their failure in Afghanistan (embarrassing, but not Warsaw Pact demolishing by any standard) or by other, unspecified means.

But no, the real reason for the failure of the former Soviet Union was passive defiance by Soviet workers, whose favorite (quietly-spoken) saying was;

“As long as they pretend to pay us, we will pretend to work.”

And that is everything!

Once it became obvious to Soviet workers that the Soviet Union was ‘no longer working’ for their best interests, they employed a sort of ‘passive defiance’ in return for the crass neglect they felt they had endured, which lowered the USSR’s productivity to such an extent that all it took was a few months of low oil prices and some sniping from U.S. politicians for the whole thing to implode.

Now, 26 years after the fall of the Soviet Union, Western workers are beginning to think in terms of ‘passive defiance’ and may soon follow the path of those Soviet workers.

Long story short; There are very real reasons for the growing dissatisfaction and the disconnect between 7.2 billion people on the one hand — and the 1 percent, their acolytes, and the elitist technocrats that serve them, on the other hand.

The grievances of that many people can’t simply be waved away in a ‘Let them eat cake’ kind of way.

We need a grand and new vision, one that is orders of magnitude better than the present non-vision, and one that 7.2 billion people will urgently wish to support.

Anyone up for that?

If not, we’re already on the path to lose everything we’ve built.

by John Brian Shannon


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The Synergy of the Good Economy

Reposted from JohnBrianShannon.com

An economy that constantly grows and improves because it has enough virtuous circles (and cycles) is by design, a good economy.

It’s what every economy wants to be when it grows-up.

However, there are no generally accepted metrics to measure what constitutes a good economy — but a definition by Edmund S. Phelps in his recent Project Syndicate essay is a definition that one can appreciate.

It is worth noting that the UN Happiness Index could be a way to grade the successful march towards a ‘Good’ or ‘Virtuous’ economy, as nations that rank highly on the UN Index also tend to have high productivity, high per capita income, low unemployment, a high degree of personal rights and freedoms, low crime rates (and related to that stat) generally high levels of education, and in other ways their citizens live fulfilling lives in a stable environment.

It’s easy to ‘work it back’ from the end-user point-of-view.

Another way to grade the march toward a Good Economy would be the Social Progress Imperative’s SPI Index.

If nations are ranking highly on SPI heuristics, it’s obvious that everything needed to support those high grades are *already in place* and working. Ergo, a high-scoring SPI nation is one with a Good Economy.

Social Progress Index 2015
The Good Economy as demonstrated in the Social Progress Index 2015

Perhaps nations (and economists!) should put more emphasis on UN Happiness Index and SPI heuristics and less emphasis on GDP growth.

After all, You Can’t Feed a Family with GDP

The 1%’ers will always rate their country highly on the UN Happiness Index and on the SPI Index, as their incomes and security are guaranteed and their income growth meets or exceeds GDP growth. What matters in this case, is what 99% of the population thinks.

In developed countries, GDP growth has largely plateaued, and even in the United States of America the largest economy on the planet and the country with the strongest military, GDP growth is anemic at 2% annually.

There just isn’t room to grow the U.S. (and other) developed economies more than 2% per year under the existing paradigm.

“If you keep on doing what you’ve been doing, you’re going to keep on getting what you’ve been getting.” — Jackie B. Cooper

Einstein said something similar — “The definition of insanity is doing the same thing over and over again, but expecting different results.”

Therefore, to try to get more growth out of the U.S. economy by ‘doubling-down’ on everything that we’re already doing, does nothing except prove the truth of such quotes.

But what the U.S. hasn’t tried (enough) is to use heuristical analyses to plot a policy path towards high UN Happiness Index and high SPI scores. By doing so, I posit that the U.S. could unlock another 2% of GDP growth annually.

If that’s true for the U.S. economy, it works double for China’s economy.

Did anyone else notice the productivity increases in China during, and for a short time after, the Beijing Olympics?

Yes, a mini economic boom occurred as a result of hosting the Olympics — just as it does in any country that hosts the Olympics. But productivity isn’t known to spike upwards when a country hosts the Olympics.

I guess after not seeing the sky for decades due to a permanent and thick blanket of industrial smog, Beijing residents finally got to see the sky — due to some very foresighted Chinese air pollution abatement policies that were implemented for the duration of the Olympics.

“Look everyone, The Sky!”

The Good Economy gave much-needed respite to Beijing residents during the 2008 Olympics by lowering smog levels which improved their quality of life, consequently and unexpectedly, worker productivity improved. Image by scmp
The Good Economy gave much-needed respite to Beijing residents during the 2008 Olympics by lowering smog levels which improved their quality of life, consequently and unexpectedly, worker productivity improved.

Constant smog is a normal state of affairs for residents of China’s major cities, except during the 2008 Olympics when special air quality policies went into effect (in Beijing only) unfortunately.

An improved quality of life picture for Beijing residents worked to improve overall productivity, improving the bottom line for Chinese companies.

Certain other perks were added, including never-before-seen-in-China freedoms to travel and to miss time from work in order to travel to the Olympics.

That’s what I call a virtuous circle!

Imagine if that could be made permanent. It’s an example of how improved lives for workers can positively affect productivity and the bottom line.

By employing end-user heuristical data, developing nations could double their GDP growth annually.

For the rest of us; Now that the standard economic tools to increase growth have largely ‘topped-out’ in developed nations, it’s now time to look at improving the lives of citizens by using heuristical analyses — to increase the happiness of citizens, which will increase productivity, improving the bottom line, leading to higher GDP growth.

The proof that this works well is easily found by investigating the Norwegian, Danish, Swiss, Swedish, Liechtenstein, and UAE economies.

Ultimately, the question is a regional one; How can we improve the lives of workers and their families so that productivity can be enhanced, and thereby improve annual GDP growth?

Some nations have asked, and the results have been astonishing.

Soon, people will be saying things like; “The synergy of the Good Economy is that the pursuit of happiness by individuals is directly related to the pursuit of worker productivity by corporations, which is directly related to the bottom line and GDP growth.”

And when those words are commonly spoken by both the masses and the elites, for the first time in history, our civilization will be firing on all cylinders — courtesy of the Good Economy.

by John Brian Shannon

Regionalism: The Next Step for Globalization

Reposted from JohnBrianShannon.com

Globalization was inevitable. Both the positives and negatives of globalization were inevitable. And we’re now moving into a more mature phase of globalization — a phase where common sense must play a larger role.

After all, does it make more sense to import onions from thousands of miles away in Chile or Indonesia for example, or to grow them on the rooftop of your local big box grocery store?

Think of the CO2 emission savings alone as one way of many to demonstrate how unrestricted globalization works against our common good.

Regionalism
Regionalism can lower costs, improve profits and create more local jobs for workers, while improving product freshness and delivery times.

For years I’ve talked-up the benefits of ‘Regionalism‘ where the largest share of goods and services are provided to consumers and business by producers and manufacturers within that economic or geographic region.

It’s not only in regards to fresh produce. With 3D printing and a regional facility ‘the latest thing’ can be manufactured in minutes, regionally, although the online order may have been received thousands of miles away — resulting in faster shipping and larger numbers of (regional) jobs, as opposed to the One Big Factory model, building ‘the latest thing’ in Shenzhen, China.

Of course it works both ways.

For Chinese consumers who want the latest Ford F-150 pickup truck, does it make sense to have one shipped from thousands of miles away in North America, or does it make more sense that Ford builds an assembly plant in China (and hires local workers) and fills orders from there?

I think there is still more growth to be milked out of globalization, but the next logical step is Regionalism which will cut costs, improve profits, and give consumers and business more and better choices. In high unemployment jurisdictions I would expect to see rates fall — perhaps dramatically, while low unemployment jurisdictions may see tiny improvements.

Although I agree with international trade agreements in principle, TPP seems excessively weighted toward corporate interests and not toward consumers or national sovereignty. For that reason I’m against it. The cloud of secrecy surrounding TPP certainly hasn’t helped. And the fact that someone of the rare and high calibre of Elizabeth Warren has doubts about it, tells me everything that I need to know about it. Full stop.

However, any trade agreement that enhances trade flows while enhancing national sovereignty and can show a distinct benefit to consumers and business alike should be aggressively pursued.

For me it isn’t about abandoning globalization, it’s about globalization reaching its full potential without destroying sovereignty, consumer trust, and entire segments of the economy.

It’s more about continuing to grow globalization (whenever that makes sense) and adding regionalism to the mix (wherever that makes more sense) and enhancing national sovereignty.

The day that Apple Computer is building iPhones in factories in every region of the world, that Ford Motor Company has assembly plants in every second country, every piece of clothing is manufactured regionally to the designer’s exact specifications, and most fresh produce is grown within 100 miles of its target consumer, that’s when we will see the maximum benefit from our investment in globalization.

We are where we are in regards to globalization and it has been a qualified success. But the potential of globalization + regionalism is one whole order of magnitude greater.

by John Brian Shannon

Image courtesy of www.intechopen.com Creative Commons Attribution License

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