How the West Could Double GDP Growth in Two Easy Steps

Written by John Brian Shannon |  Reposted from JohnBrianShannon.com

GDP Growth | Empowering the bottom-two economic quintiles via a Guaranteed Basic Income and a 21st century minimum wage will allow them to become part of the solution… instead of part of the problem.

We Have a Problem in the West

The top-three economic quintiles are doing just fine thank you very much, and any one of those top-three quintiles contribute more to society… than the bottom-two quintiles combined!

That includes the CO2 emission contributions of any one of the top-three quintiles by the way. And it includes the high level of government spending required for the enhanced infrastructure and security considered de rigueur for those who live near the top of the economic pyramid.

If you don’t believe that the top-three economic quintiles cost the government more, just take a drive around some of the ‘tony’ neighbourhoods in your city. Look at the streets (nice, broad thoroughfares and sidestreets that are always well paved, etc.) look at the decorative streetlights, the curbing, the sidewalks. Also don’t miss the world-class schools and recreational facilities. And of course, visit an international airport to see how many of the travelers boarding planes to sunny locales hail from the top-three economic quintiles. That would be most of the travellers in the airport.

While the top-three economic quintiles are driving their Land Rovers and taking exotic vacations and sending their kids to university (and yes, they do work hard for their money — nobody is saying any different) the bottom-two quintiles can’t.

While the top quintiles cost society much, they also contribute much. And why shouldn’t they contribute much? They’re the prime beneficiaries of that society.

At the end of it all we may conclude that (apart from their astonishing CO2 footprint and the astronomical security costs to ensure almost total security in their neighbourhoods) the top-three quintiles aren’t the problem when we’re talking about the economy.

Through no fault of their own the problem lies with the bottom-two economic quintiles and we can thank (some) economists and (some) politicians for this miserable state of affairs.


Shall We Toss the Bottom-Two Economic Quintiles into the Ocean?

Or should we allow them to become ‘part of the solution’ on the path to dramatically increasing national GDP growth?

If we did toss them in the ocean, just for argument’s sake; Who will pour your latte at your favorite coffee joint? For that matter, who will pick up your trash, man the gas station counter, feed the ducks in the city park, or cut your lawns and clean your swimming pool?

Wouldn’t you rather be earning your $100 per hour or whatever you earn, instead of spending your free time sweeping the sidewalks and changing burned-out streetlamps? Wouldn’t you rather be racing your personal watercraft with friends at your lakefront cottage? You work hard, you play hard. Great!

Now let the other people contribute too.


Maybe Those Bottom-Two Economic Quintile Types Aren’t So Bad!

As it stands now however, the bottom-two quintiles are a drag on the economy. There’s no hiding that fact.

Some are homeless and may engage in property crimes or other offenses. Others may find themselves often unemployed or in a permanent state of underemployment as 34% of all manufacturing jobs have left Western nations for Asia since 1975. (Not the fault of the bottom-two economic quintiles by the way)

And still others just can’t find their niche, nor do they have the education, nor the financial clout to engage in the type of business where they could succeed in personal terms, but also contribute to the overall economy.

They want to contribute(!!!) to their country but can’t find a way forward. And they’re not up for moving to Asia to reclaim their former manufacturing job. Nor should we expect them to.


Changing a Negative Into a Positive!

Many people have experienced the kind of drag induced by leaving your car’s emergency brake in the ‘on’ position as you travel down the highway. As soon as you realized your mistake and moved the e-brake to the ‘off’ position the car appeared to have 100 more horsepower.

But of course it didn’t. The motor had the same horsepower it always had, it’s just that by accidentally leaving the e-brake ‘on’ it took extra power to move the car.

So it is with the economy and the bottom-two quintiles.

Prior to all those manufacturing jobs leaving for Asia, the bottom-two economic quintiles contributed much to the economy. We used to call them ‘the middle class’ or ‘blue collar workers’ or ‘the rank and file’ and other descriptors.

But there just aren’t the jobs to employ them now. So many people (millions) have exhausted their unemployment insurance benefits and have given up looking for a job, any job, that they’re no longer listed as officially ‘unemployed’. The corporate world, and governments too, appreciate that those are rarely reported stats. It makes them look bad and feel bad, but they don’t know why, or how, this has happened. In any case, it’s better for them that it’s rarely reported.

Yet, there is no need to leave two-fifths of the population in a permanent state of poverty and thereby not able to move ahead with their lives — let alone contribute to GDP.

A two-track plan could accomplish a number of good things for the overall economy.


Allowing the Bottom-Two Economic Quintiles to Become Part of the Solution, Instead of Part of the Problem

Working people always contribute more to the economy than non-working people. But what’s the use of getting a job if you can’t afford the monthly bus fare to get back and forth to work? It’s a very common thing nowadays.

Make your choice now; Eat for the month, or use your grocery money for subway fare. Pay the electricity bill, or buy a monthly bus pass to get back and forth to work. Buy some decent clothes for a job interview, got the job! now you can’t afford the bus fare to get you back and forth. Ugh!

These are the very real concerns of the McJobs era. It’s even multi-generational. Older workers may work as low-paid greeters at WalMart, while younger, low-paid workers at fast-food restaurants experience similar life choices.

Two-fifths of the working age population are a drag on the economy — but only because of poorly thought-out policies and on account of the race for corporate profits which were (and are still) improved by outsourcing jobs to developing nations. Bad!

Therefore, because the situation is so tragic ANY solution is better than allowing the status quo to continue!

Two Ways to Solve Gross Inequality and Increase GDP:

  1. Legislate a standardized $15/hr wage right across the country. In this way, people who would rather work will be able to afford to eat for the month AND pay their electricity bill AND have enough money for bus fare to travel back and forth to a job. Perhaps Mom and Pop can front them the money to buy some decent ‘job interview appropriate’ clothing and help in other ways such as babysitting young children, etc. However, we can’t expect Mom and Pop to pay for all of those things, as their time and resources are limited too.
  2. A guaranteed basic income (GBI) of $1088/month per adult (a generally recognized amount, accepted by researchers and governments)
    In some cases, this would effectively ‘top-up’ the monthly income of welfare recipients and Old Age Security recipients to $1088/month from all sources. It would likewise replace all other low-income schemes, grants, etc. So much duplication of services exist that entire government departments could be down-sized (by attrition) thereby saving some government departments up to 5% in their annual budgets. Especially police and court budgets. And the multi-billion dollar SNAP programme and Food Banks could be eventually discontinued, for example.

With 21st century policies in place, the bottom-two quintiles could then afford(!) to look for a job, afford(!) to move to a different jurisdiction to accept a job offer, afford(!) to return to vocational school or attend night school to brush-up on job-skills, or afford(!) to move to a safer neighbourhood where they aren’t afraid to take the bus to a night shift job they’ve been offered.

As soon as they report on their annual tax return that they’re earning any amount over the poverty line, then their GBI payments would be discontinued. Success!


If policymakers want the present situation to continue to deteriorate; Just keep on doing what you’ve been doing, and you’ll keep on getting what you’ve been getting

But if we want the bottom-two quintiles to contribute to the economy like they did in past decades, policymakers must set payscales at rates that are relevant to 21st century cost of living standards (they’re not now!) and they must institute a GBI that replaces all low-income schemes and empowers people to either; move to a job, retrain for a job, afford transportation to and from a new job, and in the meantime, maintain their home / electricity connection / phone connection / internet connection / job interview and other employment-related clothing needs / childcare / normal caloric intake / buy medicine, and afford other necessities in our modern world until they get back to work.

How can you get a job nowadays if you can’t afford an internet connection? Do you know? (I don’t know. Can that still be done in the year 2017? Probably not)

The time for navel-gazing is over. It’s time to get brave and release the brakes from the economy and allow the bottom-two quintiles to again contribute to the economy by passing legislation that’s designed to make people part of the solution, instead of part of the problem!

Europe: The EU’s Immigration Conundrum

Reposted from JohnBrianShannon.com

by John Brian Shannon

Recent reports about immigration in Europe suggest a real macroeconomic benefit to welcoming millions of refugees and economic migrants into the country

And that’s true. Even poverty-stricken refugees consume goods and services.

If we look at the German example; One million Middle Eastern refugees have been accepted into Germany since 2010 and all of them eat food, pay rent, pay electricity bills, take the bus, buy clothing, go to movies — and in many other ways add revenue to the economy.

If each of those million refugees spend 10 euros per day (equal to their daily food spending) that’s 10 million euros per day. Totalled, their monthly food spend equals 300 million euros in Germany alone.

If we extrapolate the German example further, we see that almost everything in Germany has a sales tax attached to it, and for those that have become employed, they’re paying income tax on their earnings.

Therefore, Germany is earning nearly 1 billion euros per day from their 1 million refugees

Of course, there are the high costs of accepting refugees and some may remain on social welfare programmes for as long as 2 years. German taxpayers pay for that. But after the 2-year mark, it’s all good.

No wonder Chancellor Merkel looks at immigration with such optimism. From an economic standpoint Merkel is 100% right; It really is the best thing for Germany. A brilliant but domestically unpopular policy by one of the greatest Chancellors in German history.

And let’s also recognize that this latest wave of immigrants is additional to the existing German immigrant pool — the first wave of which began in the 1970’s, and that generation are now a cohort of decent, hardworking, and family-oriented people. A benefit to the German economy almost every day since they arrived.

It’s not all Apple strudel and yodeling in Germany, however

Crime is much higher due to those massive levels of immigration. In Germany, girls can’t even attend a women’s music festival without a high probability of being molested by immigrant men. And the same holds true throughout Europe, especially in Sweden (of all places) and in Greece.

So what’s the point? Gain more in taxes so that women must hide in their homes?

That’s a bad deal for half the population, the female half.

Thus far, the lack of leadership on what is expected of new arrivals to Europe is astonishing and breathtaking all at once.

Refugees and economic immigrants from Day 1 of their arrival in Europe, should’ve been handed water bottles and pamphlets (written in their language) describing the rules of European culture, the rights of the person in EU society, the culture of respect for law and order — and not a gloss-over job but a poignant list of laws and societal norms that must be adhered to while travelling or living in Europe.

And printed in bold letters front and back of the pamphlets:

“It’s not your *right* to emigrate to our countries, it’s a *privilege* therefore consider yourselves guests while in our countries.”

Would you allow a guest to your home to wear muddy boots and to walk all over your expensive carpets and furniture? Obviously not.

Then neither should you allow your guests to molest your girls, rob subway passengers, and engage in rioting and looting.

Nor should we allow immigrants (or anyone) to defile EU culture — culture being the mass of our thoughts, brought into the light.

“I will not let anyone walk through my mind with their dirty feet.” — Mahatma Gandhi

It’s a very human thing to help people experiencing hardship and fleeing from countries due to conflict or famine there. The fact that we still do this (although not as well as in prior decades) gives hope for humanity.

But it’s been bungled up til now in the EU and it needs to be fixed. ASAP.

Finally, refugees should be given a temporary landed immigrant card (a photo ID) that allows them to stay in the EU for up to 4 years

After that; ‘It’s time to go back home and rebuild your country, with the skills, money and experiences you’ve acquired during your time in the West.’

European countries should now, even at this late stage, attempt to:

1) Educate refugees/economic migrants about European legal and cultural standards, from Day 1 of their arrival.
2) Continue to provide the normal social benefit for each adult, until they find a job.
3) Continue to provide safe housing until reasonable accommodation can be found.
4) Continue to monitor those people to make sure they are finding services, housing, jobs, and are not being targeted by Middle Eastern ‘mafia’ types within their own community.
5) Provide a free airline ticket at the 4-year mark to allow them to return to their home country. If they don’t want to return to Syria (for example) they could exchange their ticket for another of similar value (to Cairo, for example)
6) By accepting and paying for the living expenses of refugees and economic migrants (where they don’t have their own funds) for four years, and by educating them to Western norms, and by helping them to find safe shelter and jobs, etc. it’s truly a privilege for those people to be in Europe, and they should conduct themselves accordingly.
7) If not, they should be deported as soon as they are convicted of any crime (and obviously, their 4-year pass cancelled)

Every day, we teach others how to treat us

If we teach others that it’s acceptable to walk into our homes wearing their muddy boots and to walk all over the carpets and furniture, we deserve everything that we get from those people.

If we (gently) teach them about the rules of our house and provide the support they need, we are teaching them that we’re their benefactors and that we’re people to be respected.

Thus far, we’ve been teaching the refugees the wrong things, and they’ve responded in kind. (Input = Output)

It’s a failure of vision and it’s a failure of leadership. And the experiment with mass immigration flows from the Middle East will end in the failure of some EU member nations.

We’ve already seen blowback from this mishandled affair via the Swiss voting in a 2014 referendum to leave the EU, and Brexit in 2016, with surely more exits to follow.

It’s a problem that won’t go away until EU leaders address the fundamental problems of mass migration, problems which (in the absence of proper guidance) begin on Day 1 of a refugee’s arrival.

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Bonus Graphic: A Snapshot of the European Migrant Crisis in 2015

Europe immigration crisis
Reports suggest there are many macroeconomic benefits to welcoming millions of refugees to the EU. It’s not all Apple strudel and yodeling, however.

Maximilian Dörrbecker (Chumwa)Own work, using data and information from these web sites: Eurostat dataset migr_asyappctzm (direct download) Eurostat dataset tps00001 (direct download) FRONTEX Migratory Routes Map This base map by alexrk  | CC BY-SA 2.0

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


Related Article:

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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International Law vs. Western Nations & ISIS

by John Brian Shannon  John Brian Shannon

International Law vs. Western nations and ISIS originally appeared here and at Department of Homeland Security News

International law says that it’s illegal and considered an act of war when military aircraft enter another nation’s airspace to kill people there even if those people are members of a heinous terror organization.

It’s a matter of international law. There’s no ambiguity and it’s not under debate by constitutional lawyers anywhere.

Two exceptions are allowed under international law

If a country has a mandate from the United Nations (via Security Council resolution or UN General Assembly resolution) it allows them to enter and engage hostile combatants under the specified terms.

The other exception is when the host country has formally requested foreign intervention inside their borders.

International laws apply equally to every nation. They aren’t like an à la carte dinner menu where you can simply choose which laws you wish to follow

No matter how evil some terror groups are, countries that break international law are just as guilty of breaking laws as those terror groups.

If Western nations send their fighter-bomber aircraft into Syria; a) uninvited by the host government, or; b) with no UN mandate to do so — they are just as guilty of breaching international law as ISIS, perhaps moreso, as nation states know full well the responsibilities of international law and they know that they are bound by those laws. Protestations by government officials to the contrary are irrelevant.

ISIS isn’t a country. Having pretensions at being a country, isn’t the same thing as being a country

ISIS is a terror group, and although bound by the criminal and civil laws of every country they operate in, they’re not a country and are therefore not bound by the same laws that nation states must uphold.

My point is, if we in the West are saying that we’re a great moral force in the world, then we better start acting like it

In no way should Western nations be invading the sovereign airspace of any country with our fighter aircraft, no matter the pretext. So…

Who are we as a people? And do Western nations respect international laws, or not?

When we abide by international laws, we are setting a good example and we should expect to always be treated accordingly by other nations. And if occasion arises when our good example is not reciprocated, then we can claim full legal recourse with support from (all) other law-abiding nations.

When we don’t abide by international laws, but instead rely on the law of the jungle — then we must realize that we will be treated accordingly by the UN, by other institutions, and by other nation states. And by groups like ISIS, not incidentally.

One way or another, we’ll reap what we sow

We should stay on the right side of international law and stop flying into Syrian airspace to bomb civilians — remembering that only some of those civilians are also ISIS-member civilians.

Until then, the West continues to break international law by flying into Syrian airspace and bombing civilians

Let’s not forget that ISIS members are merely civilians who have joined a terror organization — they’re not members of the Syrian Army and we aren’t at war with Syria — therefore, we have no legal right to be there regardless of how evil the ISIS entity is. The anger we feel at their horrific terror attacks doesn’t entitle us to become lawbreakers.

Our best way forward for dealing with ISIS is to operate within Iraq – a country which has formally asked for our assistance

The West can contribute to operations on the ground and in the air in the fight against ISIS within Iraq. We’ve been asked to be there, therefore, we should show up and contribute our best effort.

If we claim that we’re part of a great moral fight in the world, then let’s start by being moral.

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