February 28, 2019 at 6:45 pm #8010etilleyKeymaster
This was a question on Quora the other day. If you haven’t spent some time at Quora, it’s a frustrating place to visit once you’ve spent a lot of time in economic research. The low level of basic understanding of our monetary system by voters – and even by academics can be brutal. It’s too low really – and countries, where understanding is low, are suffering very real economic impacts today.
So, in this article, I am going to explain the wildly important difference between Socialist Policy and Social Contract – and more.
First, you probably realize that there are socialist policies in America. In a late monetary system cycle (late capitalism), do you realize that “Social Contract” is the stuff that determines strong economies – and not socialism nor capitalism? I resist saying this should be obvious, because if capitalism did work as well at every stage of a monetary cycle – as it did in early phases, surely America’s economy would be the best in the world by 100-times more than any other given its incredible lead and head start by the 1980s – but it’s not.
To explain why America’s capitalist policies haven’t delivered it to incomprehensible wealth late in our monetary system cycle, I have to explain that a common misdefinition of “socialism” throughout America, makes a smart answer to this question impossible. Answering the question as it is asked, doesn’t answer the important question here at all in fact.
Consider, what would a smart question have to be, rather than: Is there ever going to be Socialism in America?
There is socialism in the U.S. now – yes, of course, there is; correct. Like every nation on the planet the U.S. owns its production of mail services, and other administrative infrastructure, national parks, public transit, etc.
Medicaid – is public Healthcare – but to say that this is “socialist policy” versus private healthcare “capitalist policy” is misleading. Why?
Because healthcare is an essential of life – and a needed part of our Social Contract. Rights of healthcare, shelter, access to income, security, healthy food & water, breathable air & energy, and basic goods (cloths, furniture) – are needed – not only to sustain life but also to be a productive contributor to the economy.
People who are too tired at the end of a day of barely surviving, don’t have the time and means to create export businesses and service companies.
It’s true to say that private healthcare, bottling plants, taxi services, etc. are privately owned by capitalistic policy – but ownership models (capitalism and socialism) are just actors in a monetary system “Use Case”. Social Contract is different; its an essential Output – and it is a causal input to strong economies, as we see in this chart where high social contract nations (with values >5.0) advance 70% to 100% of the time.
Calling public healthcare “socialist policy” is like calling a shiny red hotrod – a communist-red box with wheels. Accurate, but the description of a box fails to convey important context; “hotrod” conveys layers of importance here.
A strong Social Contract is the American Dream – and the stuff that soldiers gave their lives for; its the layered important thing – if you see my meaning.
America’s Social Contract was the highest in the world – and so was their economy – until the 1980s, and then it lost its strong social contract- and then its economy began to stall – even with its huge head start. Is it a coincidence that the two seem to be in sync? Not even close.
Early in a monetary system cycle (1950–1980), Capitalism ownership models were better at building strong social contracts (the American Dream), better than Socialisms – and no-one would disagree this point as it played out.
Now fast forward to 2000 to today. Neither ownership model (capitalism nor socialism) will support a strong Social Contract – here, late in a mature capitalism – as monetary systems reach their later stages. In late capitalisms, governments have to maintain balance in monetary systems carefully due to compound interest mathematics.
Why? Try folding a piece of paper in half more than 7-times; you’ll need a hydraulic press to make to 12 folds – until that “system” is exhausted. Monetary systems have lifespans just the same. 60-years of 2% to 10% inflation rates means that world GDP is 60-times higher than year one – so now a 1% inflation lift is like a 60% inflation-rate in one-year, in 1960.
“Freedom“ in a monetary system is what you can buy with the money left over after your stable incomes pay for your cost of living. In a perfectly-understood, and perfectly managed monetary system, we would ensure cost of living and salaries remained in proportion – but instead, we didn’t teach our kids to vote for this – and we didn’t know any better so we voted for pretty faces and pretty messages like “low-tax” trickle-down and other lies that misbalanced the ratios.
Economists like Ann Rice and Milton Freeman kept rich sponsors greedy by assuring them that no harm could befall the rights of the working class in an open market – despite Dicken’s and Lord Byron’s detailed explanations of what open-markets actually look like and lead to. Nicholas Taleb suggests that there is no way to predict future events based on past recurring events; he suggests that calamitous events, religions, and other significant social phenomenon are ever unpredictable “Black Swans”. Of course, we can learn from lessons-learned, but it’s not surprising that the din of academic professors, Gordon Gecko characters, and self-designated “watchdog” organizations who realize that it’s much easier to invent smoke and problems rather than to tackle the much harder task of establishing science and solutions.
Social Contracts must be guaranteed at all times – and absolutely be added to the Constitution of large democracies (large populations have diverse economies which mean that the unsustainable policy experienced by minorities can be ignored for decades).
Eleanor Roosevelt explained this when she led the creation of the Universal Rights of 1945 at the U.N., “Evil” – is the systemic failure of empathy – explained the Nuremberg Diaries 1946. After every great depression, our great philosophers documented basically the same lessons-learned so that this wouldn’t happen again – and then we ignore these lessons. Leviticus 25–26 (760 BCE) and the Code of Hammurabi (1763 BCE) 4,000 years ago, even explain ideas on how to reset economies preemptively, every 50-years – instead of waiting 60-years for hardships to set in.
The U.S. Constitution was created for a population of 2.5 million – and even today this model of democracy works well in small population nations like Norway, Denmark, and Ireland. Now large democracies like Germany and Italy have figured out they need a strong social contract and are working to rebuild their’s with terrific financial results.
Strong social contract nations build strong economies 100%. The SCP Report shows that weak social contract nations lose billions daily – the U.S. loses $37 billion a day; 13 trillion a year – to its crumbling social contract.
Who cares if socialism grows? The last 20-years has seen capitalistic ownership explode to 50% of all wealth internationally, so socialism really isn’t a pressing concern today.
A better question would be: Will Social Contract grow stronger in America?
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