The Proof that Wealth Theory collapses economies

Related:                 Notice to Academic Institutions RE: Education Reform         The Doctors of Indoctrination

Abstract

Since its creation in 2016, Transition Economics (TE) is an evidence-based science in economics that has been hard at work trying to correct academia’s 100% theory-based teaching of economics, business, finance, law, and all university social faculties. TE is a new Civic Science focused on both social and economic performance management (because the two are inseparable) that respects Newton’s insistence that truth is ever to be found in simplicity.

Read our article on Marx’s Indoctrination to get a sense of how ideology’s ramblings and “false definitions of Good” have passed for Economics and Social Science at universities – in the past and in today’s global mature capitalism as well, unfortunately.

To the question “Does ideology, theory, logic, math, and modeling-based Micro and Macroeconomics advance economies?”, this research article uses the evidence-based science of TE in a “Proof” that explains the only empirically correct answer to this question is – “No”.

To the question “Does academia’s ubiquitous teaching of Wealth Theory and Neoliberalist curricula collapse our economies reliably?” Yes.

This paper is a “living” research document that welcomes arguments for and against any points made here. A bibliography is available upon request, and most of the facts here were collected, and can be confirmed through simple other online searches or easily downloaded statistics from the World Bank, OECD, and similar civic data API provider websites.

TEP Charts presented in this paper are explained on Transition Economics’ website and are cataloged online at the WAOH Econometric Library csq1.org/WAOH.

Wealth Theory

70 years ago, Western business and academia created the greatest economies in history, while today these institutions are collapsing both economies and societies reliably. 90% (48) of 54  large democracies are collapsing today.

What is “Wealth Theory”; what are its origins, and what does it claim?

Wealth Theory originates from authors of philosophy and ideologies sometimes called “Neoliberalism” or “Libertarian” from the 1800s, but earlier authors can be traced back to William Petty’s 1654 Theory of “Laissez-faire” when he created the world’s first GDP Report (a 3000th ranked, fairly meaningless measure of national success). This harmful ideology and secular religion, has roots that continue back to oligarchs since the first civilizations in the Middle East and Sumer, Mesopotamia, and Babylon (modern-day Iraq).

By Wealth Theory’s economic theory, a nation needs wealthy individuals as its first priority – and not just wealthy individuals, but ones who are focused on business profit entirely, because that is what is needed to build economic success. In a Neoliberalist’s utopian society, any chicken-and-egg history discussion of national success begins and ends with wealthy individuals. Wealth Theory is a theory that is easy to prove false (citation), but this ideology and indoctrination soldier on to explain that without wealthy individuals and a tactical focus on profit, no nation can prosper or grow to reach its full potential.

In 1971, the Swedish Central Bank decided that it wanted Wealth Theory more widely adhered to, so it took on a program to 1) create a new Nobel Committee and Prize called the “Nobel Prize for Economic Sciences”, and 2) it also funded the Chicago School of Economics, whose misleadership icons – like Milton Friedman – are still taught today in every Western university.

Wealth Theory applauded the same policies of the 1920s that created the Great Depression – in just 10 years, which explains the chart above and its 40-year-long reliable GDP Growth measured collapse. Note that this chart is the same measure used above in the Nominal GDP Change since 1800.

To date, the Nobel Prize for Economic Sciences has NEVER ONCE AWARDED AN ECONOMIC SCIENCE – it just awards Wealth Theory, and the success of this international misinformation program today collapses 90% of large Western democracies.

One look at an actual science in economics at Transition Economics will quickly let you understand the difference between belief-based economic theory programs versus a STEM and evidence-based data science.

In 325 BC, Aristotle categorized government systems into just two categories – as either Evil (systemically unempathetic and unproductive) or Good (productive human advance). No doubt you have never heard this because schools teach wealth theory in civics classes, and not actual civics.

Evil systems of Government include: Tyranny, Oligarchy, and pure Democracies. Aristotle realized that these were systemically Evil (Systemically Unempathetic) organizations for any government. 99% of today’s democracies call themselves Republics – democracies that are governed by a Constitution, in hopes that this step will protect them against Oligarchy – another Evil form of government. Unfortunately, most Constitutions are not written to protect human advance and prosperity (see the essential list of human rights that need to be protected by constitutions here).

Good systems of Government – were Monarchies, Aristocracies, and Polities. These were systems that ensured Good for the people and good for the state, without the petty corruptions and poverty, hoarding, or scarcities created by individual greed and misleadership. (see https://www.britannica.com/biography/Aristotle/Political-theory).

Aristotle also explained how societies must measure truth reliably through scientific knowledge (“Epestien”), which encompasses a thorough understanding of causes, not just observable facts in symptoms, based on observable facts that lead to vetted causal explanations (Epistemology). The Scientific Method was penned again by Franciscan Monk Roger Bacon (c. 1220-1292) and again by Renaissance statesman Sir Francis Bacon (1561–1626) in Novum Organum.

Theories are fiction until they can be proven real, truthful, measurable, observable, with results repeatable by anyone. At this point, when facts prove theory true and real, it becomes science, and not before.

So by Aristotle’s categorizations, Wealth Theory and Neoliberalism are fictions that state “Oligarchs and Oligarchies are essential”. WEF is an example of an “economic power” and Neoliberalist assembly, as was the Roman Church of the Dark and Middle Ages, The NAZI Party, Babylon, Persia, Rome, etc.

Classic Approaches to Sustainable, Successful Societies

We’re often taught that the Bible teaches religion. The Bible predates all modern religions, and it is used by religions, but it isn’t a religious book; what ta Biblia (the books) are, is our first Constitutions, Criminal Codes, and Bills of Rights, followed by books of example civic lessons learned through the observation of successful and unsuccessful civilizations across 3,000 years of documented history. 800 nations have based their Constitutions on the Bible since 1791, but most do not implement all of its human rights – see our article on Constitutions here.

The Bible’s storytelling had to be understandable to a 99% uneducated community in 425 AD, but its 73 books are literally full of warnings against Aristotle’s evil systems of government – as seen in failure after failure of systemically unempathetic, tactical short-term-minded, and profit-focused civilizations through time.

Not a single “once-great” civilization has survived despite hundreds of generations calling themselves “modern” and whatever other naïve platitude you might like to ingratiate your era with. Leadership is essential, but it is clearly not easy to balance well consistently over time; Leadership (civics) has to be learned, it has to be scientific, to manage its performance, and it has to utilize performance management in the way that Franklin Delano Roosevelt (FDR)’s greatest economy in history did.

This article presents a scientifically proven solution to the problem of Wealth Theory’s Mature Capitalism, just as the Bible did. The Bible also presented a scientific observation-proven solutions to the misleadership and harmful financial inequality that we see today. Indeed, every successful capitalism creates inequality reliably over several decades – and Oligarchies also develop rhetoric to defend cold indifference to the problem as well. Find the Bible’s pre‑emptive 50-year economic reset “Jubilee Year” solution in Leviticus 25/26.

When I say that the Bible’s solution was “pre-emptive” here, it’s because the wars and misery caused by unbalanced mature capitalisms – were well understood, recognized, and documented in 1763 BC’s Code of Hammurabi 4,000 years ago. The leadership of Jubilee-Resets (debt-forgiveness, restoral of ownership, assurance of income, and productivity) prevented unnecessary and unproductive hardship. (see https://www.washingtonpost.com/opinions/2020/03/21/debt-jubilee-is-only-way-avoid-depression/)

Mature Capitalisms are expensive and dangerous, and they are predictable, preventable, and correctable too.

Why are we not taught about these basic civics lessons of sustainable and prosperous economies? Why were we not taught about the basics of surviving epidemics? There were no vaccines in 1917’s Spanish Swine Flu, yet it was addressed more quickly than COVID-19.

For a fuller list of broad problems in academic curricula, read our Notice to Academic Institutions

Human Advance and Social Contract

“When we don’t know what to stand for, we can fall for anything.”   1929, The Methodist Mention

We are not taught the lessons of sustainable societies in large democracies today because we find themselves unprotected by older Constitutions from the grip of a failed economic theory sponsored by Oligarchy.

Soldiers don’t risk everything to see a handful of wealthy individuals collapse our societies, they risk their lives and family’s well-being for social contract and the promise of a bright future.

It’s no great discovery to realize that learning begins with the young, and then continues on through our TVs and social media as adults.

When was the last time that you saw?

1. A scientific Social Contract Loss Report – explaining that every G7 nation loses an average $30 billion to $4 billion US per day today
2. A scientific Social Contract Product Report – explaining your G7 nation ranks 50^th in the world for Production and Productivity
3. A scientific Social Contract Report – that explains your nation’s ranking for worst-in-category social problems internationally
4. A 100-year Production or Productivity Report (GDP Growth) – which shows that today’s are at the lowest production levels since the 1930s.
5. A Wealth Inequity Report showing that 40% of the American population (130 million people) own nothing and are made unproductive by Starvation Wages
6. A Collapse Motivators Report – documenting the processes that are actively diminishing our societies today

Each of these reports is scientifically and quantitatively causal to advance; yet, you don’t have access to them and you have never been told to insist upon seeing them. So, instead you have to make a decision to vote Left OR Right while neither is a responsible choice.

What reports are we told to look at instead?

1. GDP Reports – a meaningless report, that is always positive, designed to hide problems to a majority of voters (citation)
2. Stock Market Performance – completely meaningless; performance here has no impact on economies (citation)
3. Unemployment Reports – false reports of unemployment showing around 1/5^th of the citizens are struggling to find living wage incomes (see ShadowStats.com)
4. Right Policies and Left Policies – There are only sustainable and unsustainable policies in science (policies proven to advance nations or policies proven to collapse them). When Constitutions do not protect against all parties supporting only collapse policies – as we see today, your nation can only collapse as a mathematic certainty. The only side a voter must vote for is “Advance”

Right and Left is divisive nonsense and restraining (indoctrination) created by billions of dollars in annual political advertising spending. Only an Oligarchy can afford this investment, and once in power the Return on Investment that an uneducated and unprotected citizenry rewards them with, is many multiples of this spending.

In 2020, Donald Trump and Justin Trudeau assigned trillions in new debt to “shore up the Markets”. Stock Market performance has no influence on economy, and 85% of stocks are owned by the top 10% income and wealth owners.

Bring on the Science

Transition Economics (TE) is an economic science and data science similar to the Pareto Principle (80/20 Rule) and Six Sigma Quality Control quantitative sciences used routinely in manufacturing. Sabermetrics is similar as well; you might have seen this scientific approach explained in the 2012 movie MoneyBall.

Transition Economics is simple science that anyone can use to validate political reports, claims about the economy, election policies, national advance and collapse, reporting accuracy, and so on.

Rather than repeat that lengthy article here, I will point to an explanation of Transition Economics at https://csq1.org/transition-economics/ and explain the Proof for why Wealth Theory’s Micro and Macroeconomics is unscientific and collapses economies too.

Microeconomics

Microeconomics discusses detailed activities for every business individually.

1. Supply & Demand – There is no evidence to prove supply or demand impacts economies. At https://csq1.org/info/NE.GDI.STKB.CN.htm, we see a TEP Sheet of Inventory Level reports across 186 countries. From our learning of how to read TEP Charts on the Transition Economics website, we can see that inventory levels are meaningless. NE.GDI.STKB.CD is the same measure in U.S. dollars and shows some benefit by SCP 2020 measures in 29 of 70 High-Income nations.
2. Cost & Profit – There is no evidence to prove Cost and Profit impact economies. Stock Market reports react to Profit changes, and yet those changes have no measurable impact on societies. The following report looks for advance or collapse resulting from 17-years of growth in the stock markets of 90 nations, and there really are none except in extreme exceptions (only crashes and hyperinflation can impact societies and economies negatively – as we see in the chart).
   

   Stock Market is a help, but performance is irrelevant (unless severe)

3. Finance Accounting – Assets and Liabilities. The “Externalizing of Social Costs” has long been a basic teaching principle in Accounting programs, and is responsible for imbalance and collapses created by starvation wages, anti-family values hiring-policy, and the elimination of family pensions.

The greatest period of human advance was the Cold War; 1950 to 1980. This was a period in which engineers where given cart-blanche to develop the computers, robots, aircraft carriers, nuclear reactors, and things that our societies need and use every day. As soon as these reigns of control were passed to accountants in the 1980s to 2000s – and most noticeably in the 2010s, innovation faltered and slowed to a snail’s pace, productivity is the lowest since the 1930s, economies and social problems have consistently worsened; losing billions of dollars daily now; largely hidden and without reporting as well.

Leadership by non-leaders and non-expert administrators, accountants, business generalists, and politicians, leads to humanity’s collapse and “Lingchi” too – a torturously slow death by a thousand cuts.

 

Macroeconomics

Stock markets are important to Capital Formation, and nations that have stock markets also have advancing economies at a rate almost double that of nations that don’t (have Stock Markets). See this statistic in the chart above where 57% of the 90-nations surveyed have advancing economies; a TEP report of all nations typically shows 32% to 40% advancing.

So there is a benefit to having a stock market, but stock market performance (ups and downs) is a different discussion.

All stocks are 85% owned by the Top-10%, so stock markets can easily create productivity-stifling inequity especially where these markets and income imbalances are unregulated as they are today. Today’s conditions are similar to what they were in the “Roaring 20s”; when politicians were made rich by wealthy financiers, corporations won court cases that effectively enslaved workers, farms and livelihoods were lost without safety nets, homelessness skyrocketed and was ignored, and family values were thought to be less important and divorce became common.

Annual Stocks Trades (%GDP) and 20-year trading increases (see the linked TEP Sheet) do indicate improvements to advance and Social Contract – based on a 3,000^th and 992^nd ranked (not very important) reports, but this thin sign of benefit is about as much of a justification as we can find for Stock Market performance.

Most evidence-based reports, however, confirm their unimportance.

As far as the benefit of salaries created for traders, agents, banks, and other finance industry jobs is concerned, the IMF (International Monetary Fund) Finance Industry Index proves that Finance actually damages economies reliably after they exceed a threshold size of approximately a nation’s GDP.

This means that the cost of having too many salaries in finance is paid for by every member of a nation; it’s an externalized social cost in fact.

Do I really need to be voicing concerns about the boom in reverse mortgage “products” – within housing bubbles that either prevents young people from beginning lives or ensures usury that will never allow them financial independence during their lifetimes?

Why are these not simply an obvious systemically unempathetic, and therefore – evil – social problem?

Consumption – We’ve discussed that stock markets performance is meaningless, what about Consumption? More Consumption (as a percentage of GDP), corresponds with collapse, where Manufacturing and Industry correspond with advance.

So Sales Economies are never as successful as manufacturing economies and low‑production & low-productivity nations trend to collapse.

Another interesting discussion is the lie that “open markets build competition”. Today’s epidemic gave a number of industries and companies an opportunity to gouge consumers trapped in their homes by the virus. Lumber is an industry that has gone through 30-years of consolidation until just five lumber companies now exist in the United States; two are publicly held and three are private.

When construction sites saw lumber climb to nine and ten times normal during the pandemic, a number of YouTube Channels – and NOT major news media (which is another interesting discussion) reported that the public companies have reported quarterly returns of 630 million over last year’s 5 million for the same period. The five companies colluded to gouge the nation’s “construction boom / economic turnaround initiatives” and price-fixed lumber at rates several times normal, for no other reason than together they held a monopoly and so they could. The situation was abruptly – and quietly – corrected, shortly after quarterly reports were made public.

Media reported the problem of rising lumber costs, but no media reported monopoly, price-fixing, and consumer gouging; and no media reported the correction as prices simply returned mysteriously to normal.

These were my personal observations, which I realize are unscientific until a proper research paper studies and validates them, but I will add it here to make us think about reality, lies, and the kind of lives that we are willing to permit as a society too.

Money is printed by countries from thin air as a reality. In 1934 most countries in Europe were simply forgiven huge blocks of their debts by mutual agreement, and on average every nation loses $4 billion every day today – unreported, while we are told to listen to complete nonsense about being too “over‑budget” to ensure neighbours have what they and their families need.

Common Sense is the social benefit of our decisions. What can be said about our Common Sense when we permit elections where unsustainable Right and Left policies both guarantee the collapse of our economies and society?

There are solutions for wide fiction – and for leadership voids too. A failed economic theory and its mathematically-assured collapse is fixable; every problem is and this problem has been solved for us before as well.

We voters must be more assertive and take responsibility to make scientific changes happen now. Why? Because this is what “misled democracies” are required to do this; in a Monarchy system of government these decisions would be made for us – professionally, and with a much better result (during mature capitalisms) statistically. Monarchies are doing great today; much better than large democracies.

To read about thesis-built ACT Parties that permit democracies in every nation to vote for scientific change – see ACT Canada, ACT USA, ACT Great Britain, and others.

And this articles isn’t advertising a money-making scheme, this is what Bibles and leaders do. Leaders don’t voice problems and then not solve them; we solve them so that we can get on with good lives and advance responsibly. When life’s messy, we clean it up.

America had one of the greatest leaders in history in Franklin Delano Roosevelt (FDR), and we’ve somehow been directed to forget the lessons that created the greatest economy and society in history just 70-short years later.

World-wide Economic performance:

Micro and Macroeconomics theory has been the pervasive standard of teaching economics since the 1980s owing to the success of a primarily-American marketing effort.

1. Overall economic performance worldwide shows more countries are collapsing with productivity faltering since the 1980s, in direct correlation with M&M’s adoption.
   

In 2016, Transition Economics calculated that 72% of economies were collapse‑trending including 4 out of 7 G7s, and 47% of the G20.

As an aside, all six (seven if Norway is counted) FDR Constitution nations are Advancing.

1. Production – worldwide was at the worst since the 1930s

• Productivity – was similarly at the lowest levels since the 1930s, shown here for the United States

Our Recent History

The identical conditions were seen in the 1920s, in response to extreme GOP NeoLiberalist policies that resulted in a similar crash of the American economy, this time within just a 10‑year period.

Low Tax, Laissez Faire, Small Government, Open Markets, Globalization, the unemployed are just lazy; these were the policies of the 1920s’ GOP just as they have been since the 1980s.

Today’s Republicans are hardly conservatives; rather, their leadership are wealthy Neoliberalists who continue to support a failed Wealth Theory fiction that costs Americans $30 billion every single day; 52% of their overall economy annually – unreported.

Democrats are no reprieve of course; the lion’s share of those policies are unsustainable as well.

The fact that Right and Left is meaningless in science, forces false “sides” to rely on lies and reports that actively hide our mathematically assured collapse.

An education system that produces belief‑based students – permits fiction to be accepted easily by adult voters too. This is a form of child abuse and it’s socially irresponsible, which is why the Bible warns us to protect ourselves from lies, lies of omission, and from liars as well explicitly.

Repeating a message can make fiction appear true to a belief‑based learner, while an evidence-based learner dismisses unprovable narratives no matter how oft-repeated.

This is why the 1605 AD King James English Bible updated the 425 ACE (AD) Latin Vulgate Bible, which updated the 325 ACE Greek ta Biblia, which updated the 763 BCE Hebrew Torah, which updated the 1763 BCE Code of Hammurabi; and has been updated again today for at least a sixth-time by “The Book”.

The Book teaches today’s now‑educated populations the lessons and laws that build sustainable societies scientifically – using evidence‑based teaching instead of the storytelling and belief-based instruction needed by a 99% illiterate and uneducated population 1,700 years ago.

“Ta Biblia”, or “The Books”, was the Bible’s New Testament translations from Palestinian stories written in Aramaic into Greek; the Vulgate translated both old and new testaments into Latin, and assembled both together for the first time into the Bible that we know today.

“The Book”, and the Global Leadership Book of Knowledge (GL-BOK) academic faculty and curriculum – is located here.

Franklin Delano Roosevelt (FDR) implemented corrections for the same problem-policies of the 1920s that we see today. He, however, refused finance industry calls for more debt, and then created the greatest economy and society in history. Reagan and subsequent Presidents began dismantling FDR’s corrections in the 1980s; and returned Neoliberalism and collapse to America in doing so.

Henry Ford’s “Living Wages”, in the Second Industrial Revolution built a middle class for the first time, and with it, he also built our contemporary economies. The “Starvation Wages” of the First Industrial Revolution (1750-1820) had no economic impact whatsoever.

FDR had to threaten to retire leading members of the Supreme Court, and also had to assume Executive Powers in order to correct inequity in 1940.

Starvation Wages returned to become a problem again as FDR’s corrections were turned around by 40-years of Presidents beginning with Reagan, returning the U.S. to the inequity levels of the 1920s again today.

According to the 2010 Federal Reserve report, 130-million Americans (40% of the population) own nothing – due to Starvation Wages. Low Productivity levels created by this inequity costs the U.S. economy the unreported $30-billion every day that I discussed above.

World War III

Let’s not forget the very real threat of a fourth World War set off by the powder-keg of currency wars, trade wars, and real wars and “intrigues” created by another preventable mature capitalism.

War is a common result of social and economic imbalances created by uncorrected Late Capitalisms, but World War III will be the first to occur in a mature nuclear age as well. World War III’s holocaust and nuclear winter will more closely resemble the descriptions explained by the Bible’s final chapter and Revelation.

 

Solutions in Global Leadership

Too many articles voice problems without solutions and too many of us discount science as marketing.

Every problem has a solution, and for this problem the solution is the scientific study and curriculums of the emerging academic field of Global Leadership; quantitative, evidence-based socioeconomic science which is proven to advance us reliably and ensure and sustainably prosperous societies.

Global Leadership sheppards all socioeconomic programs of Economics, Business, Finance, Law, Social and Political Studies – and if your local universities do not have this, they must build it now – due to all of the reasons discussed above. Read Our Academic Mediocracy for that discussion.

Textbooks, theses, data science apps that double economies with mathematic assurity, and now YouTube videos – explain these solutions here at CSQ Research. CSQ’s  Sustainable Societies Programme curates the largest econometric library in the world – WAOH, ACT, The Global Leadership Book of Knowledge (GL-BOK), “The Book” – a sixth update of our 4,000-year-old Bible, and more.

In Conclusion

In econometric science, we find that Productivity builds strong economies reliably; and that any Chicken and the Egg discussion of strong economies begins with a strong society first.

Wealth Theory’s reporting ignores and hide problems:

1. in Social Contract (social problems – suicide, divorce, sustainable fertility, homelessness, and 14 other measures)
2. hiding low productivity
3. hiding genocide (by insufficient birthrates)
4. protects belief-based narratives and messaging designed to win re‑election and power, while forsaking everyone’s broad economic and human advance

Bibles are textbooks that teach us how to build sustainable societies; a fact which explains why its most recent update insisted on including a Golden Rule and a mandate for advance (creation). The teaching approach and lessons were designed to cement into our core values, that systemic good and charity were behaviors and policies proven essential when building a reliably sustainable and prosperous society.

This also means that failing to safeguard values like “Mankind is our business” and the policies that enable people to be every nation’s greatest resource, is self-defeating, acute, misinformed, uneducated, inaccurate, unempathetic, unscientific, and also sociopathic as well. As the defining attribute of a sociopath is a clinical inability to understand the harm that they do, systemic failings of empathy is behaviour that needs protected‑from in Constitutions – as FDR Democracies did after World War II (Italy, Germany, Netherlands, Japan, Finland, Norway, and Austria).

The defining attribute of a sociopath is a clinical inability to understand the harm that they do, so systemic failings of empathy is behaviour that needs protected-from in Constitution – as FDR Democracies did after World War II (Italy, Germany, Netherlands, Japan, Finland, Norway, and Austria).

ALL FDR Constitution nations today have advancing economies, six to eight weeks vacation, great healthcare, pensions, great education, and lower taxes than an American private insurance boondoggle.

ALL non-FDR G7 democracies are collapse-trending today (by “Trade Balance” proven to correlate to social problems).

Leadership for the People, empathy, helping neighbours and being neighbourly, advancing communities, and ensuring that we all have what we need to be productive, is not a nice-to-have altruism; rather, it’s an essential pragmatism.

Being good to one another isn’t an option either; rather, it is an essential need of growth, advance, sustainability, and prosperity; it’s a proven sustainability model.

We are so busy voting for parties that tell us whatever we want to hear, that we’ve incented those parties to refuse to adopt science that can ensure our prosperity as a nation – so that they can stay in power.

As we approach a federal election in Canada once again, join me in understanding that today is the day that we must set a new course that insists on responsible leadership.

 

About the author: Edward Tilley is an econometric scientist who develops Data Science that mathematically assures human advance and the doubling of economies (see MEMS).