February 26, 2016 at 9:42 am #3890
Introducing Transition Economics
The Science of Sustainable Cyclic and Automating Economies
Transition Economics is the Science of profiting from the resetting of social and economic policy and from Economic Injectors – like Renewable Automation and Foreign Debt, which are designed to compensate for the normal Late Capitalism phase of our recurring 60-year Capitalist Economies.
Fully 72% of global economies are in a Collapse trending today. Transition Economics (TE) offers an important teaching and learning framework that explains scientifically, even statistically, that this is perfectly normal and correctable.
Transition Economics is critical today too – because our economies have run their normal course and are no-longer sustainable by the status-quo policies that worked so well at the start of a new boom cycle in the 1950s. Per the normal cyclic behaviour of 60-year repeating Capitalist Economies – over these past 4000 years, our economy will Collapse into bedlam unless we bend status quo to permit a responsible economic reset to take place. To read Transition Economics, click here.
Strategies that work well at the start of a Monopoly Game, do not work the same near the end of the game. These Kondratieff or K-Waves of economic boom and bust, have been proven straight back to Ancient Babylon; in K-Wave Spring, the economy is good and people live easily – like in the 1950s’ American Dream. K-Wave phases continued to Summer, then Autumn, until we finally arrived in late Winter today – just as we did back in 1935, 1890, 1840 and so on. As long as there has been capitalism, there have been well-documented 60+-year K-waves.
TE Maturity Models discuss #TEMature policies that sustain Spring Economies and avoid Winters altogether, but if these steps are not taught and enacted, Winter Phase economies MUST switch to a number of key new policies in housing, in guaranteed reverse-tax incomes, and in automation engineering supports that safely and responsibly restore incomes, spending power and the restart of a new and viable Economic Cycle once again.
Failing this Transition, economies continue right on to Collapse – until either “new wealth” (the California Gold Rush ended the Great Depression of 1835 for one example), or wars / revolutions / populism / dark ages & plagues reset the economic cycle by distributing wealth forcefully.
Its not fate that delivers cycles into inequity and eventual collapse; its simply the inevitability that results from Capitalism’s unsustainable compounding interests, year-over-year expectation of exponential increasing profits, housing bubbles and similar. These cycles must be managed and reset responsibly – or society collapses into revolution under the weight of inequity.
Its normal; its predictable; and it is correctable. Once we teach our high-school students (and future voters) these strategies that proactively prevent these collapses, we should be able to maintain a sustainable capitalism indefinitely as well.
Today, we live in a K-Wave Winter; a Global Depression. If we all simply call it what it is, then we can begin to leverage the lessons of history that tell us to transition to the guaranteed incomes and spending-power-restoring policies that put our buying power at useful levels again. The exact steps to resetting an economy are described in the book Transition Economics book step-by-step – read about TE-Mature Policy here.
The quicker and more thoroughly that we reset to a new 60-year Financial Cycle, the quicker we will all realize a Good Life in a new economy once again.
During this next turn of the cycle, we are also transitioning from our current Manual Economy to an Automated Economy. Our technology has advanced sufficient to support this important event in our Human Evolution and this is a really exciting time because automation that gives us the basics of life – like food, energy, shelter, and transportation automatically – can be considered – Renewable. Once Renewable Automations are scaled to the entire planet, we might never have to transition out of another Capitalist Cycle again – not 60-years from now – nor forever. Our reliance on money certainly diminishes with these automations and we can finally ween off of any counter-productive influences that debt and monetary policies have brought to our societies too.
“Imagine how foolish will we all look once we have permitted special interests to safeguard inequity – even at the potential risk of obliterating all in a nuclear war – at the very same time that humanity could be deploying our renewable automations to make money as completely unnecessary as we might like?”
Transition Economics – Edward Tilley, 2016
Transition Economics guides you through a Scientific Method of aligning policies that work to accomplish both Automation and a renewed, sustainable Cyclic Prosperity easily.
Science solves Global and Social Problems
Finance prevents Science
Transition Economics fixes Finance
Click here to view The Country Renewable Automation Index
Click here to view Transition Economic’s Maturity Model
According to the AEA (American Economic Association) website, when observation shows phenomena that are absent in, or inconsistent with, available theories, Economic theorists look for new theories.
Transition Economics falls into this “new theory” category in that no previous work has taken a direct look for an “automation to export to guaranteed incomes” and “government automation investment vs. infrastructure spending” equation in previous theory, to name just a couple of examples. Transition Economics is a Science, where other Economic Theories fail the burden of proof in observation – and other validations required by Scientific Method. In other words, if current Economic Theory and Education worked, we would not be seeing 72% Collapse Trendings in Economies globally today.
Keynesian Economic Theory is an example of economic theory proven unsustainable in observation and therefore many spin-off deep-dives in these theories in banking and monetary system management are unscientific as well.
No-one is homeless once robots build life-cycle-managed, serviced housing automatically; and no-one starves when food is delivered to every home without a human hand required. Like the driverless-car, these are projects that can be built within just 2 to 5 years; there is no emerging technology needed here – only focus is needed. These technology mitigations just takes good leadership – and they obviously important to build.
Automations are also forecast to reduce the total number of jobs by up to 50% over the next 20 years and this means that Governments need to understand what are the algorithms that will responsibly transition its citizens to other forms of income and retraining. Previous Economic fields have not tried to create a direct relationship between “automation to export to guaranteed incomes” and “government automation investment vs. infrastructure spending” equation in previous theory, to name just a couple of Transition Economics examples.
The Science of Cycle Economics
The second primary concern of Transition Economics deals with necessary adjustments that must be made in Economic Controls governing four phases of a naturally recurring 60-year phenomenon in Capitalism called long-called Cycle, Kondratieff Wave or Longwave Economics. Well-documented this past 4000 years, Cycle Economists notice that systems and policies/controls in housing, monetary systems, interest rates, and wealth distribution must change with the natural transition from phases of Spring, Summer, Fall, and Winter (the Great Depressions that come every 60-years).
Nikolai Kondratieff first wrote about this phenomenon of Longwaves in 1925; Howard Schumpeter brought the study of Longwave Economics to Harvard in the 1940s, which he renamed Kondratieff Waves in tribute to its founder – or simply K-Waves. K-Waves in Capitalist societies have since been confirmed back to 930 AD China in numerous academic thesis, and Edward Tilley suggested in 2015 that these phenomenon are confirmed again in records of the Economic Controls, the pre-emptive 50-year corrections made by “Jubilees” (Debt forgiveness & Wealth Redistribution), that are recorded on the 1760 BCE Code of Hammurabi.
Click on charts to see Hi-Res image …
A Game of Monopoly permits us to view a 60-year Capitalist cycle in just 60 or 90 minutes of play. Notice that normal “status-quo” strategies from the beginning of the game, do not work near the end – in the hotel-round of the game – and also notice what happens at the end of the game; all property returns to the bank for redistribution so that the game can begin again. Debt-Forgiveness and Wealth Distribution – the return of Incomes and Spending-power to all – is needed to restart the game (the cycle) again at the end.
The same changes that restart a game of Monopoly, restart a new cycle of Capitalism the same. If #TEMature Policy have not controlled inequity, there must be a safe, pragmatic and successful Reset 0f Incomes and of Spending-Powers.
- In Spring and Summer Phases of a 60-year K-Wave cycle, wealth is distributed and society has equality of opportunity. People can own homes, cottages, start families at age 20 easily – so Wealth Creation can go on under Socialistic or even unsustainable Capitalistic Policies.
- In Autumn wealth begins to accumulate and Socialistic policies sustain a Good Life for all very well. It is for this reason that Norway and The Netherlands have a Good Life and strong equality still today in a Great Depression. Basically, adopt Policies just the same as the Netherlands and Norway do.
- In Winter – Yes of course we are in a Great Depression today. Socialistic Wealth Redistribution Policies are needed urgently in housing (Land-Grants instead of Mortgages), Interest Rate recovery, Usury Law, Graduated Tax (92% for Rich), Offshoring & Foreign Ownership Protections, Income guarantees and working Safety-nets, Automation of Basics of Life – see #WPProjects.
The Good News? The deeper the Wealth Redistribution in a Winter Phase, the longer and more successful is the next 60-year Cycle.
Democracy and Change
When a trained Monarch governed the Economy in ancient Mesopotamia, “Jubilees” corrected the problem easily. When untrained modern-day Democracies governed, these corrections can create tremendous human suffering. In approximately 20% of Great Depressions historically, War or Revolution was required to redistribute wealth. Most Great Depressions however, found new funding sources and distributed those new funds as in the Great Depression of 1835 which was ended by the California Gold Rush. That event multiplied America’s Gold Reserve by a reported ten-times – and that is just one example. 1893’s Panic was alleviated by new Immigration Wealth – and every new cycle has its own redistribution story.
The more extensive the Wealth Distribution, the longer and richer is the next Economic Cycle. 1893’s Cycle lasted just 40 years as that “Panic” was not felt pervasively enough to be called a Depression – and the remediations were not sustainable for long. This failing may well have created the weak economic underpinnings needed to inspire both World Wars I & II.
A Monopoly Game permits us to view a 60-year Capitalist cycle in about 60 or 90 minutes. Notice now how “status-quo” strategies from the beginning of the game, do not work reliably (or at all) near the end of the game – and also notice what is needed to restart and begin the game (the cycle) again; restarting requires Wealth Distribution and Debt Forgiveness. This was an easy thing to accomplish when King Hammurabi was the supreme Monarch of all Mesopotamia in 1763 BC, but this change becomes a lot more difficult in democratic times where we do not teach our students about responsible proactive Economic Controls like “Jubillee”.
This second area of Transition Economics is designed to correct the numerous changes in capitalist societies caused by the cycle phase’s as they advance from Spring’s one-income-household and one-job-for-life model, to Winter’s very interrupted income and social support systems.
Example 1: Wealth Distribution Targets and Graduated Tax are important to maintain in any society. The Netherlands (#5 on The CMI and an RAI Maturity Level 3 Country) has universal healthcare, daycare, guaranteed incomes, retirements, housing and offshore hiring controls – and as a result they also have one of the highest Per-capita GDP export (wealth creation) rates in the world.
Why is this true? Because all citizens can participate in commerce – and clearly citizens do just that when they are afforded the opportunity. In North America during the 1980s, we implemented Reagonomics (Trickle-down) and began lowering interest rates; by 2010’s U.S. Federal Reserve Report, neither policy had distributed wealth into the hands of lower-income citizens and so inequity and social problems climbed steadily for 25 years; the problem is so extreme that U.S. incarceration rates are 5-times that of the next G7 nation. Canada (#100) and United Kingdom (#29) citizens have one-third Holland’s export per capita; Australia (#106) creates 1/6th; Americans (#60) create 50% less exports than a Dutch Citizen.
What does this lost productivity cost each nation when they fail to permit socialistic or capitalistic policy changes as explained by Transition Economics? In America – as much as $8 trillion is lost in exports annually (based on 160 million people being unable to participate today) and in Canada, the United Kingdom, Australia – $600 billion are forfeited annually on average. This is a very high cost to pay in defense of inequity.
Transition Economists argue that tax-neutral and revenue-neutral changes that support basic services, avert a “Penny-wise and pound-foolish” decision to continue current status quo policies which prevent 100% of citizens from participating in commerce.
Example 2: Capitalistic Housing Policies must be reconsidered when a Winter Cycle is permitted by poor economic controls. Mortgages can often turn into Usury as interest rates fall-and-fall and Bubblenomics take control. A 5% interest rate increase tomorrow might turn 50% and more, of new homeowners into the street, and turn whole communities into ghost towns. Solving this problem is straight-forward, Socialistic Land Grant Housing Policies would not only give a second option to homeowners who cannot afford mortgages, but it would also permit young people to start a family at age 20 without the stress of waiting for University to finish, jobs to pay student loans, on-and-on. Could we switch back-and-forth from Land Grants to Home Ownership? Of course, yes.
Why must Transition Economics address both areas of Automation and Cycle Policy? The reason is for simplicity. Take for an example scenario a situation where Science might solve a major issue in society today: Emissions-related Global Warming. Science would say that Thorium Reactors, Cold Fusion, Carbon-Polymer batteries and zero-emission fischer-tropsch distilled (non-fossil) diesel fuels and diesel-hybrid cars, would begin to solve the problem of Global Warming within five years. Current generation battery-cars create as much CO2 as a gasoline vehicle, and so science would pass these vehicles by.
Financial considerations, however, prevent these technologies from being developed. How many governments would lose up to 40% of their GDP Export revenues if Oil Production stopped tomorrow? How many legal contracts, companies, and employees would be uprooted? Politicians would be routed; and politicians are people and organizations that generally prefer to take credit for their tremendous economic leadership. So, Transition Economics must therefore also solve these Finance problems as well.
Global Automation of our presently Manual Economies
The technical field of automation is advancing at a rapid rate and no economic theory is presented to manage it, Transition Economics is suggested to set guidelines on how to weather the storm of the next 20 to 30 years of consistent automation change within our societies. Transition Economics develops new skills in core transitioning algorithms and is also explains the application of these skills in specific real world examples and business cases.
A criticism of mine for Keynesian and other economic theorists is in their often exclusive use of mathematical proofs as evidence or measure of deductive reasoning. Any theory may be true in unrealistic isolation, similar to the 12th-century Fibonacci Sequence’s description of plant growth, but both in Science and in practical terms, 800 years later – Observation remains the only valid measure of a forest. The importance of the forest’s many thousands of other ecosystems cannot easily be modelled one on top of the other and many systems can be too easily forgotten as well. In Economics, mathematics works to model very specific and isolated systems like Supply and Demand, Interest Rate reactions, but it cannot as yet accurately predict the effect of hundreds and perhaps thousands of external economic influences that each relies upon probability and even luck (exceptions to highest-probability outcomes).
Science & Finance
Scientific Method insists upon both Observation and Calculation; one must confirm the other to credibly call itself a Science. Keynesian Economics delayed critical Wealth Distributions that resulted in a world war killing 40 million in the 1930s – failing its test of science when its theory were observed to be unsustainable. We would hardly want to revisit that course again in today’s mature Nuclear Era.
Longwave, or K-Wave Theory, is an excellent example of an economic science divined through observation of repeating patterns almost entirely; K-Waves are to economics what geysers are to geologists. K-Wave Cycles are far more useful in determining which economic controls are appropriate for our capitalism’s cyclic needs, than any other mathematically modelled economic theory system that we know of presently.
A Transition Economist would:
- Counter 972 Job-losses (per million population per month) created by Automation with Guaranteed Incomes, Retraining and an Automation Engineering Fund. Why? Because observation in other countries proves that creating these supports, also creates a new economic injector at the same time that citizens are proven generate more wealth (higher export-per-capita) for their country by these policies.
- Counter Interest Rate increases with Anti-Eviction and Land-Grant Policy alternatives. In the E.U., there are twice as many empty homes as their are homeless people; and there are 5.5 million homeless in Europe. Where has the adult sensibility in Financial Policy decision-making gone? Homeless people commit suicide 5% of the time and many are denied access to return to jobs and a viable life again.
- The extent to which a Country’s Exports are impacted by resource-market swings, is dictated by its GDP Export diversity and quality, so a Transition Economist would seek to balance export and import quality carefully. Like any portfolio of assets, resource and food (Oil, Coal, Oranges, etc.) exports should represent a risk-managed percentage, alongside high-profit engineered products, packaged foods & goods, and other manufactured exports which can be automated and sold most profitably.
- Renewable Automation – #WPProjects (http://csq1.org/world-peace-transition-projects-faq/) is a new global export marketplace that also builds sustainable Renewable Automation for all basic Production Economy goods and services, shelter, energy and so on. By participating in this plan, each country becomes a World-Leader in assigned Hi-tech Technologies at the same time that they create abundance.
- Energy Poverty and Oil – Diesel-hybrid vehicles could be running 100-mpg with near-zero emissions on zero-carbon-footprint synthetic fuels within a year or two; Audi makes this fuel in Germany today. Fuel would not cost more at the pump – but in order to do this we would need to support jobs as they shift from companies pumping fossil fuels out of the ground. Workers would now be needed in local companies who are refining clean fuels where needed. Electricity Generation must change to full-time alternatives like Geothermal, cold-fusion and safe, inexpensive thorium nuclear reactors too. See Energy Policy here.
Transition Economics solutions are mandated to resolve Financial and Legal realities that encumber sustainable success as a community and nation. In keeping, Transition Economists recommend electing leadership who are builders, doers and engineers; individuals with solid track records in building by SUSTAIN Project Management Method process and problem-solving.
A Transition Economics Problem-Solving mantra might resemble:
“When Science or Reason solve Global Social Problems But Finance and Law prevent Reason, Transition Economics makes a workable Financial solution”
Considerable work was done years ago when the Soviet Union failed to monetize its production – as did China, and they changed their economic model to adhere with other G8 countries back in the 1980s. The work to transition from Communistic to Capitalistic was later called the “Transition Economy”.
Example TE-Throttle Calculations
- How to make automation charges simple, fair, and not labor-intensive for businesses.
- Should a surcharge or higher tax rate be requested from an employer when releasing a worker due to automation? Automated plants are more efficient and also use fewer working lights, security, worker amenities, and can run 7/24 in many cases. What is the socially-responsible thing for a company to do when enjoying a higher rate of productivity and profit? What should the rates for workers automated be – per industry?
- Workers wishing to transition to either maintenance technician or automation development & improvement roles should be permitted and paid a higher business salary or government income? Rules for offshoring restrictions should prefer local workers; should retrain and make all parties successful here at home wherever possible.
- If 20 men are rated as needed for road construction – which is now automated, should construction companies bid an equivalent cost per man and remit to government; or should the road owner pay a charge per kilometer of road installed – over and above the contractor’s bid?
- When bus, taxi and truck drivers are no longer required – and passengers or goods are picked up and dropped off automatically, how will displaced drivers be charged for?
- Construction equipment replaces local jobs at a mine in Kenya. The Government of Kenya requests salaries equal to the crew required to build the road manually. Which algorithm to follow?
- Modelling turns what-ifs questions and KPIs (key performance indicators) into charts which permit smart optimization of automation decisions. Which models are important to each tier of the production economies? To mining, forestry, farming, fishing; to manufacturing, baking and food packaging; and to tertiary economy needs as well.
CSQ Research is presently seeking leading University support and sponsorship for more than a dozen PhD Thesis in support of International Transition Economics Planning and Development:
- GDP Exports
- GDP Imports
- Highest Value GDP Industries World Wide
- # of Workers per Industry
- Number of Production Economy Automations
- Rate of Automation per Industry
- Cost of New Safety Nets per Automation
- Unemployment and Underemployment
- Minimum Wage
- Housing, Mortgage, and Usury Debt Limits
- Military Spending
- Underfunded Retirements
- Real Estate & Housing
- Social Problems – see Wealth Distribution is Good for Business
To name just a few measures…
With a basic understanding of which industry automations benefit the country first, and return investment most quickly, engineers should be enlisted and projects started in earnest.
Edward’s book goes on to describe important Guarantee Incomes and Social and Engineering Safety Nets in detail and in his TED Talk slide presentation which is embedded in the message of the World Peace – The Transition.
The following suggests a number of charting tools for determining our current inventory and trends in each country economy. Edward introduces a number of these charts in this book and then works through specific case studies. Edward’s book “Transition Economics” is planned for release mid-2016; Pre-order that book today.
Automations have started already in many industries and some of the safety net costs may need to be offset by revenue generating initiatives quickly now – in order to avoid national debt problems from becoming unmanageable in just the next few years.
Other Cycle Economics considerations
Consumption is the biggest percentage component of the GDP and economy. Consumers consume when they’re working, growing income, and are confident about their short-term economic circumstances. Not only do we have chronically high unemployment, it’s not going down, and the number of workers defined as “long-term unemployed” is at record levels.
The next chart shows the change in unemployment in this recession versus the prior ten recessions. Note that seven years in, we show unemployment comparatively higher and more consistent than in any other recession since the last great depression, which this certainly is as well.
Corporate layoffs of twenty-year workers, unfortunate investment instability and choices, and inadequate saving habits are creating very real concern for long term. Our corporations are failing us and they have a lot to answer for now.
According to the Employee Benefit Research Institute, 47% of workers age fifty-six to sixty-two are probably going to come up short in meeting all the expenses that retirement will throw at them. That’s half of the working population!
According to Public Integrity, the number of pensions at risk inside failing companies more than tripled during the recession. But not to be outdone, the public sector has even bigger problems. Related to the Municipal Finance Crunch referenced above, and poor investment results since 2000 have put many public retirement plans in dire straits.
This is a chart showing the state-by-state comparison of retirement fund status. To these statistics we also need to add Social Assistance and Medicare/Universal Healthcare as well.
The USA has record debt at $18.1 trillion by today’s count, which is approximately a debt to equity ratio of 15%. At the current rate, we’ll hit a point where we’ll be issuing debt to pay the interest on our debt. Fortunately the world has not lost interest in buying US debt. As borrowing rates begin to climb, debt will accelerate and we have to manage currency debasing leading to inflation and hyperinflation.
This is a look at the trajectory in debt accumulation.
By many measures, real estate is in a bubble that has become completely separated from economic indicators altogether. All Federal attempts to turn real estate around failed in 2010 and we stand poised to repeat the Usury Mortgage practices that created the 2008 as those that lost their houses then are coming back after seven years of bankruptcy forgiveness. Here at least we’re seeing correction pressure.
This shows the real estate mortgage purchase application index. Note the decline since the end of 2005.
I discussed Bubblenomics in Chapter 13 – Land Ownership. We will expand on managing these KPIs throughout the Transition in the next book.
The Top 10 Markets in the world were “crashing” in response to China’s Black Monday meltdown in August 2015. The United States was down 2000 points from highs, with two consecutive daily drops of 500 points. Japan’s Nikkei is extremely volatile and down more than 3000 points as well.
China plummeted 40% from highs earlier this year. Germany has lost one-fourth of the value of all German stocks. The UK, down 16% and their economy is on shaky ground. France’s stock are down 18%. Brazil plunged 12,000 points and is officially in recession as is Canada. Italy is down 15% with shaky economy as well. India stocks dropped 4000 points and finally Russia, was doing better than others, but half of their exports are oil and will suffer as long as oil prices stay low as they are today.
Point is, Financial Markets are of little and often negative benefit to low-income and middle-income families during Winter Cycles.
Reward Systems in Capitalist societies can arguably, but also easily, be said to be upside-down from or opposite Social Benefit. I do not think anyone could credibly argue that a cancer care, burn unit nurse, or even elderly caregiver – does not deserve to come home to a well supported household with scenic vistas and a quiet backyard. At the other obvious end of the spectrum, financial-system leads produce little, evade tax professionally, off-shore engineering, and release long-time employees as high-pension-risk employees, while they themselves retire easily while drive fast cars to high-end homes, send their kids to private schools, and afford well-padded bonuses, parachutes and retirement packages.
High-Performance is ever important to incent in any society; reward systems should be based on meeting goals which include accountable Socially Responsible goals.
Transition Economy versus Transition Economics
Transition Economics should not be confused with “Transition Economy”. During the change-over of USSR States to Republics during Perestroika in 1986, the systems put in place to transition communist states into capitalist republics were called the “Transition Economy”. The “Transition Economy” went on to build housing bubbles and inequity as in other Keynesian Economic societies. Although Transition Economists study this transition and leverage some lessons-learned from that change-over, Transition Economics has very different targets and measures that create a sustainable economy long-term.
A weak economy is most felt when citizens are denied access to incomes – whether from Employment, Business Ventures, or Guaranteed Income Programs. Governments have the most interesting work to do during the Winter Phase – but we have been through this many, many times before as well.
Science solves Global and Social Problems
Finance prevents Science
Transition Economics fixes Finance
Order the Book today !!
Transition Economics was first introduced in World Peace – The Transition on Christmas Eve 2015. TED and Nobel Selection Committees review submissions for Transition Economics in 2016.
Aristotle called projects in pursuit of a sustainable Good Life and Society, a “Right Plan”. At CSQ Research we have built that Plan and work tirelessly to communicate and work with World Leaders to do their part in building World Peace in a rapidly scalable and sustainable way via #WPProjects.
See our forums at Twitter and Google+, read the book, and sample articles at WP Magazine at csq1.org/mag .
World Peace is just a Project !
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— Edward Tilley (@TilleyEdward) December 29, 2015
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