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Economics is a social science, desperately trying to be a physical or natural science.
Economists attempt to prove their science chops by using mathematical equations. Open any economics text and you will see it filled with false mathematics. We say “false,” because mathematics implies a level of precision not found in social sciences.
Consider Supply and Demand, the very bedrock of economics theory. You’ve seen the basic formula: Demand / Supply = Price (or Value). Mathematically, it indicates that if you know two of the variables, you can determine the third variable.
Utter nonsense, and we all know it.
While Supply sometimes can (but often, not) be physical and measured directly, Demand most often is non-physical, psychological and a derivative of the formula. Two, completely different entities in the same formula.
And then there is the third variable, Price or Value. Often they are quite different. While Price can be specific, Value, like beauty, can be in the eyes of the beholder.
At best — at the very best — the formula can give you a hint about what might be a direction. And this is one of the most fundamental formulas in all of economics.
The unknown, unpredictable quantity is what makes the social sciences social: People.
Economics essentially is about money, and everything in economics devolves to motive. Why do you want money?
Well actually, you don’t want money; you want what you believe it can buy: Goods and services, yes. But far more: Power, pride, admiration, security, the feelings of accomplishment.
Other than mere ignorance, what then is the motivation for telling the Big Lie?
We have discussed this in earlier posts, and we’ll borrow freely from those posts in compiling this chapter.
LEADERS & FOLLOWERS
We humans, being social animals, form societies. Most societies have Leaders and Followers. In human societies, Leaders protect us, so are given special powers and privileges.
Evolution has taught Followers they benefit when their Leaders are strong, effective and possibly care about the well-being of Followers. So Followers are motivated to believe their Leaders have those traits.
Caring most often is a function of proximity or shared experiences. Typically, we care most about our parents, spouses and children. They are closest to us.
Sliding down the list, we may care for other close relatives, friends, close neighbors, far neighbors, people sharing similar life experiences and very distant relatives.
Well down the list, might be strangers sharing our religion and nationality, followed by strangers, not of our religion or nationality.
We root for teams, often home-town teams or teams having other features we identify with. Generally, we gain nothing from their victories and lose nothing from their defeats, and they care little about us. Yet we passionately care what happens to them. They are our Leaders. Their victories and losses are ours.
This makes evolutionary sense. Social animals cannot survive alone. We need the pack. When any member of the pack, especially the Leader, is attacked, our own safety is compromised, unless the attacker can be defeated.
Followers are motivated to close the Gap between them and their Leaders, which can include physically being close or communicating with, or sharing some life experience with, Leaders.
Followers feel more comfortable when they figuratively can “touch” their leaders.
Just as Followers need Leaders, Leaders need Followers. They too, cannot survive alone.
Evolution has taught Leaders to strive to widen the psychological distance between them and their Followers, lest the Followers not respect the Leader’s superiority, or even challenge the Leaders for power. To be a Leader, one must have Followers who respect and agree to the Leader’s leadership.
To establish their superiority, Leaders create protocols. In Japan, the Follower bows lowest, while the Leader may barely nod. Popes and kings wear crowns and special robes. They live in castles, and they demand special forms of address, all to separate themselves from their Followers.
Leaders address Followers by first names, while Followers respond with “Mr.” or “Sir” or “Dr.” or “Senator” or “Excellency.” Thus, superiority is maintained.
American leaders may be rich, famous and/or have a powerful position in society. Your boss is a Leader and you are a Follower, except when you are a Leader and your assistant is a Follower.
You may not think about it consciously, but there are protocols that separate you from your boss and separate your assistant from you. Followers follow protocols to strengthen the ties, and to gain favor with (i.e. come closer to), their Leaders. Followers obey commands and demonstrate appreciation for their Leaders. (No one ever was fired for giving the boss a gift or for laughing at the boss’s jokes.)
Leaders follow protocols to strengthen the fealty of their Followers (i.e. small gifts called “social spending”), while widening the psychological distance between them and their Followers.
We see a conflict of Leaders widening the psychological distance from Followers, while maintaining them closely enough for them to act as servants. And we see the Followers trying to close the psychological distance, while maintaining subserviance to please the Leaders.
It is a conflict marked by Followers’ envy and needs vs. Leaders’ contempt and needs.
GENERALISTS AND SPECIALISTS
Bears are not social animals. The male bear roams alone. He is a generalist. His food, shelter, safety and survival all are his own responsibility.
We humans are specialists. Some of us grow food and some distribute it, some cook it and some serve it. As specialists, each of us has come to accept that other humans have specific knowledge we don’t have. Being neither a farmer, nor a distributor, nor a cook or a waiter, I accept there are experts who have certain knowledge I don’t.
YOUR FRIENDS AND NEIGHBORS
Typically, the vast majority of your friends and neighbors are in financial circumstances similar to yours.
You probably live in a neighborhood matching your wealth. Poor people are geographically restricted by finances. But even rich people, who can live anywhere, prefer to live among other rich people and associate with other rich people.
This is no accident. It is a matter of comfort. The rich feel uncomfortable when a poor person comes close, except in the role of servant. Even then, protocols are followed to maintain or widen the Gap.
THE RICH AND THE POLITICIANS
America’s primary Leaders are first the rich and then the politicians, who are controlled by the rich (via campaign contributions and promises of lucrative employment.)
Both have similar desires: The rich want an underclass, tame enough to accept hard work for moderate-to-minimal reward, and not to demand more power or proximity.
The politicians, servants of the rich, want an underclass, tame enough to accept lies about the need for minimal reward, and not to demand more power or proximity.
Over time, the rich developed worldwide, the BIG LIE – the ridiculous-on-the-face-of-it lie that a sovereign nation can run short of its own sovereign currency. This is the lie that keeps the underclasses in chains.
MONETARY SOVEREIGNTY
Even a few seconds of thought should be sufficient to make one realize, a Monetarily Sovereign nation, which invented the laws that created its currency, always has the power to create more of that currency. The federal government does it, daily.
Why then do Americans believe President Obama when he lies that “America must live within its means”? Why do Americans believe Congressman Boehner when he lies that, “America is broke”?
We are genetically disposed to rely on our Leaders and part of that reliance is the tendency to accept what they tell us.
Only a few more seconds of thought should be sufficient to show how a sovereign nation can prevent or create inflation by giving its sovereign currency any exchange value it chooses. Many nations arbitrarily have changed the exchange value of their sovereign currency.
Why then do Americans believe Fed Chairman Bernanke when he pretends inflation is something that could happen beyond America’s control, and that he heroically is working to control it?
The reason is simple: Our Leaders have brainwashed us into believing only their strong hands separate us from chaos, despite the clear facts that it is our Leaders who, consciously or not, create chaos, as a Gap-widening measure.
One is reminded of young girls who stay enslaved by their pimps, because in their innocence, they believe their pimps protect them from a cruel world. It’s what their pimps tell them. It’s what our pimps tell us.
ANTI-ABORTION
Consider contraception and anti-abortion laws, which never seem quite strict enough for some politicians. These actually are economic laws, but with a moral veneer.
The rich pay no attention to such laws. They buy abortions at will. But the poor are trapped by these laws.
Of what value to humankind is forcing poor women to deliver unwanted and unaffordable children into this world? One can debate about when a zygote becomes a sentient human being, but that debate is a digression from the underlying motive for all contraception laws: To create a larger, more compliant underclass.
Pro-”life” is the cover story into which a great many innocent, well-meaning people have bought. The unfortunate poor, chained to unwanted children, will work hard and cheaply (empowering the rich). And they will need government support for survival (empowering the politicians).
What better way to enslave the poor than to force unaffordable burdens on them, then to be their only means of survival, so they must beg the rich and the politicians for help.
It’s perfect.
BUYING THE STAIRWAY TO HEAVEN
Humans have been taught to bribe those in power. The ultimate power is God, so “He” universally is bribed via prayer and contributions to a church.
The motive for the rich is adoration from contemporaries and envy from the poor. But, when poor people give to a wealthy church, the Leaders gain power, while the poor are told they must continue to ingratiate themselves with the all-powerful God, a God whose needs apparently are infinite. The poor never must stop giving.
The Leaders tell the poor that support of the religion is the sole path to heaven. The poor are impoverished further, and the Leaders, being the intermediaries between God and the poor, gain power.
In many religions, the Leaders wear costumes and create customs, to widen the Gap between themselves and their Followers. The Leaders write and lead the prayers the Followers are compelled to read and recite, repeatedly.
Repetition implants the rules. It is a classic brainwashing technique.
As always, the underclass follows power, while power distances itself from the underclass. To Leaders, the Gap is of foremost importance.
THE QUESTION
When anyone in power – any rich person, any business superior, any politician, and cleric – speaks about money or economics in general, the first question you should ask is, “Why? What is the motivation? How will this widen the Gap between him and those with less power?”
Power corrupts, and the corrupted tell lies to extend their corruption. When any President, any Congressperson, any cleric, any person more powerful than you tells lies, they all lie for the same reason: To maintain or widen the Gap between them and you.
THE BASIS FOR ECONOMICS
Money is not the real goal of the rich, nor even of the middle class. The real goal is to widen the Gap.
No matter where in the wealth rankings people find themselves, their natural desire is to widen the Gap from those having less, and to narrow the Gap with those having more. The rich, however, have far more power to widen the Gap, which is why the GINI ratio continues to rise.
If you have a million dollars, and everyone else also has a million dollars, there is no Gap and you are not rich. But if you have a thousand dollars and everyone else has but one dollar, the Gap is huge and you are rich. It is the Gap, not wealth itself, that makes you rich.
President Obama tells lies to create and widen the Gap. He wants the best Presidential Library. He wants the best legacy. He wants history to separate him from other Presidents. He wants to hobnob in the homes of the rich and famous. He wants his family to have the same.
President Obama will not come to visit your house, but he may go to Bill Gates’s or Warren Buffett’s estate. What is his motivation?
Why would he prefer to spend time with Bill and Warren than with you? Because he doesn’t want to be near you. He wants to be near them. He wants to increase the Gap below him and narrow any Gap that may exist above him.
Meanwhile, you too, would like to visit Bill and Warren as a Gap narrowing measure, but you don’t want poor people coming to your house. You too want to widen the Gap below you and narrow the Gap above you.
This is the psychological basis for all economics: Motivation and the Gap.