Will the world’s middle classes rise up, in a “Helvetian War”?

 My 1989 novel Earth is credited with a fairly high predictive score.  In fact, fans maintain a wiki to track its successful “hits” – including little things like the World Wide Web and wearable augmented reality “google goggles.”

(They also track some embarrassing “misses”… ah well.)

Set in the year 2038, Earth portrays citizens in that near-future era looking back upon a brutal struggle that took place in the 2020s.  The Helvetian War was unlike anything we’ve seen since the French or Russian Revolutions. A radical rising by a fed-up world middle class, pushed against the wall by cynics and the corrupt connivers.

What they seek – and attain – is not socialism, a discredited foolishness that arose out of silly abstractions that bore no relationship at all to real human nature. Market economies have out-performed socialist or communist or oligarchic ones so overwhelmingly that only delusional fools – or would-be oligarchs – should prefer top-down, bureaucratic control instead of the fluid productivity that we get out of creative competition. (Does that make me sound like a right-winger? Silly.  Broaden your memes.)

No, the new radicalism that may be demanded in the 2020s — especially by emerging middle classes in the developing world — is to give all people a chance to compete fairly, free from parasitism by their homegrown kleptocrats and from the rising global variety. Free from the secret, conspiring control of a caste that Adam Smith himself called the oppressors of freedom and market economics across 6000 years.

“All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.” –Adam Smith, in The Wealth of Nations

$21-trillionNow, in that context, consider this headline. $21 Trillion hoard hidden offshore by global elite.

Yes that is a “T” and not a “B.” Just sit there and consider that number.  Then think about my prediction that the world’s middle classes will become radicalized, perhaps in the 2020s, or even sooner.

The study in question estimates the staggering size of the offshore economy and how private banks help the wealthiest to move cash into overseas havens. Russian, Saudi and Nigerian oil barons top the list, followed by US and British bankers and then drug lords and other criminal enterprises.  The totals amount to as much as the American and Japanese GDPs put together.

With US tax rates at their lowest levels in 60 years, and taxes on the rich at their lowest levels since 1920, it would seem that they still aren’t low enough for today’s super wealthy.  Consider the GOP’s potemkin rally in Tampa, in this context.

See also this angle: This hidden wealth costs western democracy governments $280 billion a  year in lost tax revenue. That’s annual.  An amount so huge that infrastructure repair and boosted science could coincide with cuts in the actual tax rates for law-abiders who aren’t part of the secret Lords Economy.

Want to see where this might lead?  Try reading Earth.

== Is a World Middle Class Even Possible?

In fact, it is more than possible. If by “middle class” you mean having a clean home with electricity and sanitation, a washing machine and access to transporation, plus kids who are in school with adequate food, clothing and books, then that already includes two thirds of the Earth’s human population, a fact that is seldom mentioned by either left or right.

Why is this good news ignored? Because of the Paradox of Progress.  It’s all a matter of deep personality. The reflex of folks on the right is to avert the gaze from problems to be solved and to resent nagging to solve them. The reflex of the far-left is hypersensitivity to perceived problems. To rail for solutions – but to deny that any past attempts at improvement ever worked! The right is suspicious toward the whole notion of “improvability” of either humans or society. The left wants improvability, passionately, but insists it has never happened yet.

Both extremes are – in effect, completely crazy.

Amid ongoing debates over progress, there is a third group. Those who seek to improve the human condition and who admit that steady improvements have already taken place.  These are called “liberals” – a very different breed than leftists – and to them the question of whether development has taken place inevitably gives way to practical discussions.  How to foster a speedup of already ongoing progress.   Pragmatic progressivism eschews dogma in favor of asking: what has worked and what hasn’t?

What’s becoming clear is that some parts of the world are doing better than others.  In 1970, South Korea had a lower per capita GDP than Ghana.  Today, all the nations of East Asia have left all African nations in a cloud of dust, and that includes China, which had a thirty year hiatus under Maoism.  Today, Latin America has large areas that are burgeoning — e.g. Brazil — and sub-Saharan Africa is experiencing its most rapid rate of growth (outside of certain hell-holes) since colonial kleptocrats gave way to local kleptocracies in the 1960s.

Still, the African acceleration is only impressive compared to previous stagnation. And some regions that have tried — under pressure or tutelage from international development agencies — to reform their laws and civil society, have failed to make them sufficiently competition-friendly to invite much new investment, or to give vibrant locals a level playing field against conniving local elites.

== What do the professionals say? ==

Two interesting perspectives offer a glimpse at just how difficult the problem can be.

In a fascinating and vivid audio-visual presentation, Owen Barder explores the implications of complexity theory for development policy. He explains how traditional economic models have tried and failed to understand why some countries have managed to improve living standards while other countries have not. Using complexity theory, he shows that development is a property of a system, not the sum of what happens to the people within it.

While Barder is both interesting and informative and is on-target in his range of criticisms – (do watch the video!) – in the end he winds up sounding like a lot of “complexity” fans.  Okay, so the problem is complex.  Thanks for telling us that.

For balance, have a glimpse at an interesting, if a bit depressing, appraisal of the likelihood that creative-competitive capitalism can ever take root in MENA — the Middle East and North Africa — despite formal legal reforms.  The problem is an ancient one… oligarchies of a few at the top, engaging in what Adam Smith called “rent-seeking,” using informal connections and conniving to bypass the new “civil society reforms” and still maintain their advantages, thus repelling or driving out investment in new competitive enterprises.

It is a standard pattern that this World Bank report deems fairly hopeless to overcome in this region, though others are doing better… while the United States slips ever deeper into the classic oligarchic pattern that Adam Smith loathed.

So, shall we commit seppuku and give up?  Of course not.  There is enough light erupting all over the Earth to encourage belief in progress, not only that it can happen, but that it has.  And that tech-driven transparency will help, when citizens can record and expose local corruption with the touch of a cell phone.  And that — far better than chiding — is good enough reason to persevere.

== So, will the world’s new middle classes rise up? ==

As I portrayed in EARTH… and explore a bit in EXISTENCE… there are two types of uber-rich.  Those who are loyal to the Enlightenment Experiment that empowered their rise and (in effect) gave them everything they have… a diamond shaped social structure in which even with their billions, they – and their children – will keep facing fresh competition from a lively, vibrant population of educated and confident citizens…

…versus a portion of the new-aristocracy that simply does not get it.  Who think – as oligarchs did in 99% of past human cultures – that they are superior NOT because of this year’s latest goods and services, but because wealth inherently means lordly merit.  Such folks aren’t at fault for having this reflex.  We are all descended from the harems of guys who pursued power tenaciously and darwinistically.  The reflex is in our genes.

But it’s a poison. Our Enlightenment Experiment achieved more human progress in just four generations than all the preceding feudal societies combined.  Its founders, like Adam Smith, recognized the oligarchic tendency and denounced it.  They knew that the foolish “uber” types would keep trying to pound our diamond shaped society back into a pyramid, promoting “rent-seeking” income (like dividends and capital gains) ahead of the wages earned by creative and hardworking people with their hands.

Inevitably (and history bears me out) all this conniving will have just three possible outcomes.

1- They succeed.  The Enlightenment Experiment comes to an end. (In Existence I explore the rationalizations they might give, to excuse such a backward shift, some of them very clever!)

2- The middle classes – uniting in common cause with knowledge professions like science – could enact yet another mild, moderate, incremental, American-style revolution, of which 1776 was only one example. So was the first U.S. Civil War and Teddy Roosevelt’s progressive era, and FDR’s New Deal, in which oligarchy gets stymied just enough to keep freedom and creative competition and entrepreneurial markets and  transparency and divided power and opportunity and social mobility going, while maintaining the allure of competitively-earned wealth as a reward for delivering cool things into the world.

3- Paris… 1789.

Here is the chief difference between the good/smart/tech billionaires and the fools who now use Fox News to push an idolatry of property that has always, always, always been the enemy of competition.  The smart guys — the billionaires in Silicon Valley for example, or Warren Buffett and Bill Gates — want option number two. If need be, they will join the world’s middle classes and help keep our looming “helvetian wars” mild.

In sharp contrast, the ones who are pushing the United States into Culture War… indeed, the lastest phase of the American civil war … actually think they are very smart.  But their efforts, if successful, will only lead to outcome#3.

They aren’t as smart as they think they are.



Filed under economy, future

2 responses to “Will the world’s middle classes rise up, in a “Helvetian War”?

  1. I have a few comments and questions for you David… okay, I am back with another overly long diatribe. I apologize in advance.

    Do you really think that America would suffer greatly if the government was spending the same per capita they did back during the social Darwinist hell that was Bill Clinton’s presidency? Wouldn’t this allow them to actually lower taxes while still having a surplus to immediately start paying down the untenable debt servitude the last two presidents and congresses have impressed upon your children?

    Taxation is by its very nature a bad thing.

    There appears to be no alternative to a ruling class that extracts money by threat of force to fund its actions. This is theft or forced labour and despite the apparent necessity for some form of taxation- it is a morally bad thing and it serves us ill to pretend otherwise.

    Surgery may be necessary at times- that doesn’t mean it is a good thing and that ever more is ever better.

    Anyone who brings up “the social contract” should ask themselves about the legitimacy of any other contract that you have no input in writing, never see, never sign and which is interpreted at the whim of the side with a monopoly on the use of force… and has access to an army?

    Not only is taxation morally wrong, it is an economically negative sum game.

    There is no moral hazard to inefficiency and waste in the government. In fact, blowing your budget is about the surest way to get a bigger budget next year. When the government builds a car it is the Trabant and it is such with its every action. If the economy is strong enough, the government can spend ten times as much as the private sector can and we can hope that it achieves half as much.

    Taking dollar one in taxes from those who earned it is an economic minus and so I can only hold that it is morally incumbent upon us to restrict the government to what only it can do. There is not a government on the planet that isn’t doing at least an order of magnitude more than it needs to.

    That said, I can’t get my knickers in a knot over billionaires trying to hide away some of their money when they each already pay tens of thousands of times more in taxes than I do.

    The money held in these offshore holdings can only return interest if it is also being lent out… so you wish to eliminate a large percentage of those loans as the money is redirected into the coffers of the governments that are addicted to monotonically spending more than they take in… no matter how much that is?

    Even the money that isn’t lent out is eventually spent on new businesses or yachts, mansions or maybe coke fuelled weekends with high priced prostitutes. Whatever that money is spent on fuels the economy to a greater extent than feeding it through the ever more parasitic gears of the government machine. How many businesses do you want to block? How many ship builders and the crew that staff them should lose their jobs.

    And ultimately, the money is theirs. Why do I deserve that the ruling class force them to transfer some portion of it to me? The only thing I can see is short sighted greed and resentment on my part and I want no part of that.

    Outside of the dictators and crony capitalists using politicians to transfer wealth from the middle class- I don’t see them flattening the diamond into a pyramid. What is happening is that the middle is moving upward but the peak is climbing fast enough that those who fetishize equality can only see the spread and it gives the illusion that the bottom is flattening.

    Really, just quadruple the distance from the middle to the top and then look at it from ten feet away while squinting your eyes. That is what the egalitarianistas are doing and refusing to look close enough at the lower portion to see that they are doing better as well.

    I’ll take option #4 where the government actually embraces the free market and sheds itself of the rules and regulations that exist entirely to sell to the highest bidder and to buy votes. They make their jurisdiction so friendly to money that some of those offshore trillions come back and are spent and invested here. I don’t want it to come back in the form of taxes; I want it to come back in the form of businesses started and invested in, I want it coming back in luxury goods bought… hell, It’d even be better for it to come back so our drug dealers and hookers have more customers.

    Clint Johnson

    • Sorry, but your logic is almost as wedged as your historical perspective. You illustrate the right’s new religion …. blind idolatry of unlimited personal property.

      Which just happens to have been the one thing that destroyed freedom and yes competition and markets in every other culture across 6000 years. As a conservative you are SUPPOSED to favor competition and Adam Smith. But if he were alive today, Smith would take one look at the lord-loving GOP and register democrat.

      Let me lay it our flat. Go get some D&D dice and randomly roll up a decade across the last 6000 years and a place where there was agriculture and metals. Now tell me that the oppressors of freedom and of market competition weren’t owner oligarchs. If you say they weren’t then you are a liar. Roll again and again 100 times. Maybe once you’ll have an excuse to shout “bureaucrats! ” or socialists.

      Smith knew the enemy of competitive creative markets is not socialism per se. It is oligarchy. So did our founders who seized very land estate larger than Washington’s and distributed them to the poor. You are sock-pupetting a set of incantations and excuses for oligarchy posed and spoon fed to you by Rupert Murdoch and his Saudi co-owners at Fox.

      Socialism is wrong/bad. So it oiigarchy. But only the latter is a threat right now.

      BTW… if you subtract two trillion dollar land wars of quagmire attrition plus the Bush tax cuts fotr the rich plus Medicare Part D — ALL OF THEM GOP idiocies… then the deficit vanishes. Grow up

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