There is a bitter joke in the US that every two years the American people are asked to choose between the stupid party and the evil party, which is which depending on whether you are a Democrat or a Republican.
This year is different. The Trump/Cruz/Sanders phenomenon indicates that the electoral contest is now between the party of rage and fear (Republican) and the party of envy and resentment (Democrat).
What is behind this transformation of the political scene, not only in the US but in Europe as well, when as recently as the turn of the century things looked so optimistic?
In short, social entropy in the Western World, triggered by the rapidly-increasing concentration of wealth (defined as productive assets), as meticulously traced in the 2014 tome "Capital in the 21st Century" by the French economist Thomas Piketty. The ever-increasing role of capital as a factor of production and the concomitant reduction of the role of labor, as a result of modern technologies such as advanced robotization and three-dimensional manufacturing, is set forth in the 2015 book by Jerry Kaplan, "Humans Need Not Apply".
The owners of capital are now coming ever-closer to monopolizing wealth, which they share with the scientific, technological and managerial elite--the one percent and the ten percent.
The rest of society finds its standard of living in constant decline, as it becomes increasingly dependent on dead-end jobs and government transfers, now approaching fifty percent of the US population and even more in some of the European countries.
Rage over increasing powerlessness and fear of the immigrant and the terrorist is coupled with envy and resentment of the ten percent on the part of the ninety percent, the result being ever-greater social entropy, as the fabric of society shreds.
In the meantime, the "great recession" created by over-lending on the part of the owners of capital, matched by over-borrowing on the part of the owners of labor, with the resulting and inevitable financial crisis, was met by massive lending by the central banks to rescue the institutions of private capital. This resulted in a huge increase in liquidity to try to address a problem that was essentially a lack of solvency. Coupled with low, zero or negative interest rates, which penalized small and medium-sized savers, stagnation and chronic un- and under-employment resulted.
Economic stagnation and massive over-indebtedness has resulted in a lack of legal investment opportunities for this tsunami of liquidity, and that in turn has led to an ever-increasing level of profits in the criminal economy, with the criminal syndicates providing financial assistance to terrorist organizations, all facilitated by traditional financial and commercial institutions trying to take advantage of the opportunities offered. Banks, other financial institutions, commodities traders and corporations of all types have entered into a negative feedback dance of money-laundering resulting from the exponential increase in drug trafficking, arms- and people-smuggling and terrorist financing, along with a rainbow-spectrum of other anti-social but profitable activities.
Massive corruption has inevitably flowed from all of this.
In the meantime a growing population of under-educated and unemployed young men provide the cannon-fodder for the criminal syndicates and the terrorists.
In short, the rage, fear, envy and resentment are entirely understandable and to a large extent justified. If no steps are taken, and soon, to encourage the expansion of capital ownership in the population as a whole in the Western World (including Israel), through such mechanisms as cooperatives, employee stock ownership plans and community investment trusts, social entropy and its resulting political manifestations will continue to increase, until the fabric of civilized society is torn beyond repair.
Norman A. Bailey, Ph.D., is Professor of Economics and National Security, The National Security Studies Center, University of Haifa, and Adjunct Professor of Economic Statecraft, The Institute of World Politics, Washington, DC. He was formerly with the US National Security Council and the Office of the Director of National Intelligence.
Published by Globes [online], Israel business news - www.globes-online.com - on February 29, 2016
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