The Poverty of Nations

[Philip Copeman]

The Poverty of Nations

We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform, combination, not to raise the wages of labour above their actual rate.

- Adam Smith, The Wealth of Nations

The Capitalist/Socialist debate of the 20^th Century, argues who is the most capable of producing and fairly distributing societies profit. Capitalists are very good at making profit and bad at sharing it. Socialist can't make profit and consequently there is less to share. Either way the non producers get very little of the pie. This is what economists mean by “the poor have no friends”.

Bye and bye a philanthropist, who can produce, comes along in the name of socialism and commits to producing and helping the poor. However to do this sustainably, he needs the help of the Capitalists and shortly after the journey begins, the Buddha is killed on the side of the road and the whole system returns quickly to a Capitalist one. This is why long standing socialist dictators die as rich men.

In The Rollerball Economy of the 21^st Century things get worse! Economies of scale and open borders mean that there are no more Nations, only Corporations - International Corporations. These Corporations are not evil machines, they are simply behemoths who gather shareholders and ride the fact that high volumes delivered to multiple countries means volumes of cheaper goods of better quality. The Corporations grow because consumers love quality goods at cheap prices. With the exception of the Amish and the North Koreans, the rest of us kinda like our cellphones, cheap fashionable clothes and protein rich burgers.

Yet while we are richer, we are more unequal. The killer blow creating inequality is that high volume production does not need copious labor to produce the goods. Corporations need machine operators and asset managers and not that many of them. Without the burden of finding employment for their people, the Corporations simply grow at stratospheric rates without generating employment. That is why Apple has more cash than the US Government.

So where does that leave “The Nation”? Have we truly moved on from a century in which our greatest asset was quantity and quality of our people? In the 21^st Century global economic thinking, Nations are the households in the old model. No longer sovereign, Nations still need to put bread on the table. They can become laborers or Capitalists. If the they choose the path of labor, then they will most likely end up unemployed. At best employment will lead to a poverty trap as desperate workers try to carve out a living in private or public employment under the harshest of conditions - labor in oversupply. Labor is the route that South Africa, Spain, Greece, Egypt have chosen. It is sadly unsustainable. The unhappiness spills into the streets, a cry for participation, a heartbreaking hollow cry, an outstretched hand begging for alms. In the Rollerball Economy, labor has lost its leverage.

The Rollerball Economy offers an alternative with the ugly irony that employment and stellar Capital Growth are no longer compatible goals. Nations can act as hosts for Corporations and leave them as untaxed as possible so as not to coerce them to leave. The Nation does not have to work. The Nation can start a business that can grow into an International Corporation and generate enormous wealth. Such Corporations must be gently nurtured for their tax leaving household masses to live off the crumbs that trickle down. Such a route requires the Nation to invest its resources in an existing International Corporation. The caveat is that these business are not “employment generators”. This is the route of the US, Japan or Saudi Arabia.

In the Rollerball Economy, the 1% produce and the 99% spend their idle subsidised days watching the games.