The Road Ahead from a Grass Roots Viewpoint

[bobola]

Re: The Road Ahead from a Grass Roots Viewpoint

I like your ideas, but I don’t see how they can succeed with the 7 deadly sins lurking; lust, gluttony, greed, sloth, wrath, envy and pride.

How would you proposed that greed, for example, be eliminated or not be allowed to muck things up in your system?

[Chris Coles]

Re: The Road Ahead from a Grass Roots Viewpoint

I like your ideas, but I don’t see how they can succeed with the 7 deadly sins lurking; lust, gluttony, greed, sloth, wrath, envy and pride.

How would you proposed that greed, for example, be eliminated or not be allowed to muck things up in your system?

Bob, first of all apologies for not coming back immediately, I have been down with a heavy cold and needed to hit the sack.

You have opened up the debate into the next phase. But to get to an answer, I need to waffle on a bit about what went wrong with the existing savings institutions.

To prevent the individual citizens loss of savings when invested into what I will describe as business ventures, decades ago laws were promulgated to ensure they were instead all held by "Funds", a central repository. A good example being Fidelity. Layered upon that concept was the idea to again, to prevent the loss of savings, strict rules were again promulgated to ensure the money was never lost. It all sounded fine and dandy..... except no one considered the effect of taking the prosperity from the individual and placing it all into central repositories - who then discovered - that they were able to make more money by trading the "funds" between themselves, rather than re-investing the savings back into the local communities.

On the face of it this was a win win situation. Except that slowly, the number of prosperous savers reduced as the number of independent businesses reduced as the feudal process took over the system.

Yes, for those who were in good jobs and well paid government jobs, their pensions positively shone... No argument.... except the number of middle class citizens who were prosperous started to reduce, alarmingly.

Slowly but surely, the prosperity of the nation was taken from the local community and passed into the hands of the funds who, year on year proudly announced the ever higher level of the amount of money under their control. That statement is always one of the most prominent PR angles taken by such funds.

At first sight it might appear that I am thus suggesting that it would be a good idea if the funds were all passed back in the hands of the individual. That is not true. It is clear that the larger the fund, the less the overall risk to the individual. So a balance has to be struck.

If we look back to the Industrial Revolution, there was great prosperity spread much wider than anyone appreciated. The UK was well know as a nation of shopkeepers. But each shop was a centre of prosperity for each owner of the shop.

Every child, in every community could see that hard work made someone prosperous. Someone right there in front of them. Fine house, looked up to in the community, often became leaders of their local community.

Profits from the shops were retained in the community and prosperous shopkeepers made individual investments into others surrounding them; spreading the prosperity ever wider.

Today, it is much more profitable for the fund to have all their money, sic!, sorry, our savings, invested into a single retail group with many hundreds of shops spread throughout the nation. So in that case, now there is only one set of directors for the group, a few regional managers, and the rest at as low an income as the full group can get away with paying.

That is precisely why your children, now clear of university, are working in the local retail warehouse and I am reminded of that wonderful Jib Jab cartoon about the Big Box Mart employee, once a well paid employee, now reduced to sweeping the floors.

http://sendables.jibjab.com/originals/big_box_mart

So we have to change direction.

The way I see it, what has happened is that greed, as you call it, has been the mantra for those right at the top of the financial food chain. Every man or woman for themselves, winner takes all.

But that mantra denies the true nature of why we, as a species, have been so successful; it is because we can work together to achieve a common aiming point that each, as an individual, could not attain on their own. A good example being an airliner. There is not a single individual on the planet that could build a Boeing 747 from scratch... all by themselves without others lending their skills and labour. Yes, there are some very skilled people capable of most aspects of the manufacture, but they would not live long enough to provide all the man hours required.

So my aiming point is to see as much of the savings as humanly possible, re-invested back into the local communities, rather than held centrally by a "fund" that traded those savings, outside of the local community and between themselves and another such "fund".

It is the inter institutional trading that lies at the root cause of our overall problem, not greed as such.

Again, it is the gathering of many companies into groups with a single senior management structure via M&A to increase prosperity for the single senior management structure and the funds at the expense of the many spread throughout the rest of the nation that lies at the root cause of the problem, not greed.

It is still going to be, in part, greed that drives an individual within their local community to create a new business to ensure their and their families future success. But this way, they will have to compete against others also after employing the local community and the more investment, the higher the local wages to attract the employees.

What we have today is a system that naturally drives down prosperity for the majority over the long term. Yes, it can be argued that for a while we were more prosperous..... but will that argument stand the test of time?

So when push comes to shove, all I am saying is that it is not greed that has caused the problem, it is that we did not fully understand the long term consequences of the nature of the system we all had a hand in creating. We allowed a feudal system to propagate. Looking back when all the fuss was about communism, no one noticed that feudalism is just as bad, if not worse. Both systems stifle individual enterprise and take all power into the hands of a small group at overall cost to the majority.

The changes needed to bring us back on track to a more prosperous community, where savings are directly re-invested as equity capital into local prosperity, are very simple. yes, there are going to be difficulties, particularly while the savings of the communities build up to the point where, instead of the savers relying upon the pension income from the "Fund", they start to rely upon the savings themselves.

Prosperity comes from what you have earned and put to one side for a rainy day as savings. That requires you earn a good living which in turn absolutely relies on the amount of equity capital invested into your local community.

As Adam Smith says in the preamble of his book The Wealth of Nations; It will be seen that all jobs are created in direct proportion to the amount of capital employed.

Please, think about that.

[bobola]

Re: The Road Ahead from a Grass Roots Viewpoint

"So when push comes to shove, all I am saying is that it is not greed that has caused the problem, it is that we did not fully understand the long term consequences of the nature of the system we all had a hand in creating. We allowed a feudal system to propagate. Looking back when all the fuss was about communism, no one noticed that feudalism is just as bad, if not worse. Both systems stifle individual enterprise and take all power into the hands of a small group at overall cost to the majority."

If greed is not the cause of the problem, are you saying that there is no greed?

What motivates a mortgage broker to sell a loan they know a buyer can't afford - but they sell it anyway?

If a small group can't be trusted with their power, how would you fix that?

Who governs the governors?

[Chris Coles]

Re: The Road Ahead from a Grass Roots Viewpoint

"So when push comes to shove, all I am saying is that it is not greed that has caused the problem, it is that we did not fully understand the long term consequences of the nature of the system we all had a hand in creating. We allowed a feudal system to propagate. Looking back when all the fuss was about communism, no one noticed that feudalism is just as bad, if not worse. Both systems stifle individual enterprise and take all power into the hands of a small group at overall cost to the majority."

If greed is not the cause of the problem, are you saying that there is no greed?

What motivates a mortgage broker to sell a loan they know a buyer can't afford - but they sell it anyway?

If a small group can't be trusted with their power, how would you fix that?

Who governs the governors?

Those are very pertinent questions.

No, I am not saying there is no greed. What I am saying is that the overall problem was caused by a lack of understanding about the form of system everyone was using. For example, there are many sales organisations, with by far the majority perfectly honest and very professional. But from time to time, we hear of a sales team that are quite literally indifferent to what one might describe as social mores. Yes, in large part, that is an aspect of the quality of the management team. But those individuals selling liar loans, for example were doing so as much because the overall system in place accepted them, as to the fact that they were being sold.

Sort of if you like, you leave the back door to the bank open, you invite criminality.

Those liar loans were criminal, but the system should have stopped them in their tracks. So the crime was as much systematic crime as individual crime.

Turning to how we prevent abuse. I have a lot of thoughts about that, but I need a little time to think them through, so it may be a week or so before I can set them out in a sensible manner.

[bobola]

Re: The Road Ahead from a Grass Roots Viewpoint

Criminal by what definition?


Description of the documentary called The Corporation;

“The documentary shows the development of the contemporary business corporation,
from a legal entity that originated as a government-chartered institution meant to effect specific public functions, to the rise of the modern commercial institution entitled to most of the legal rights of a person.

One theme is its assessment as a "personality", as if it were a human being, effected via the diagnostic criteria in the DSM-IV; Robert Hare, a University of British Columbia psychology professor and a consultant to the FBI, compares the profile of the contemporary profitable business corporation to that of a clinically-diagnosed psychopath.

The documentary concentrates mostly upon North American corporations, especially those of the U.S. The film is in vignettes examining and criticising corporate business practices, to establish parallels, between corporate legal misbehaviour (malfeasance) and the DSM-IV's symptoms of psychopathy, i.e. callous disregard for the feelings of other people, the incapacity to maintain human relationships, reckless disregard for the safety of others, deceitfulness (continual lying to deceive for profit), the incapacity to experience guilt, and the failure to conform to the social norms and respect for the law.”


If corporations operate like psychopaths, as the film claims, how would you propose to change that behavior?

[Chris Coles]

Re: The Road Ahead from a Grass Roots Viewpoint

Criminal by what definition?


Description of the documentary called The Corporation;

“The documentary shows the development of the contemporary business corporation,
from a legal entity that originated as a government-chartered institution meant to effect specific public functions, to the rise of the modern commercial institution entitled to most of the legal rights of a person.

One theme is its assessment as a "personality", as if it were a human being, effected via the diagnostic criteria in the DSM-IV; Robert Hare, a University of British Columbia psychology professor and a consultant to the FBI, compares the profile of the contemporary profitable business corporation to that of a clinically-diagnosed psychopath.

The documentary concentrates mostly upon North American corporations, especially those of the U.S. The film is in vignettes examining and criticising corporate business practices, to establish parallels, between corporate legal misbehaviour (malfeasance) and the DSM-IV's symptoms of psychopathy, i.e. callous disregard for the feelings of other people, the incapacity to maintain human relationships, reckless disregard for the safety of others, deceitfulness (continual lying to deceive for profit), the incapacity to experience guilt, and the failure to conform to the social norms and respect for the law.”


If corporations operate like psychopaths, as the film claims, how would you propose to change that behavior?

Crikey! having taken the challenge of describing a new system of investment, I am now challenged to describe the underlying psychology of the indolent corporation.

I shall be honoured to give that a try; especially as it relates to the next stage of the debate. But, as I pointed out in my earlier post, you are going to have to wait for a few days. I intend to toast some ideas before expressing them.

[bobola]

Re: The Road Ahead from a Grass Roots Viewpoint

You said; "The majority do not have access to capital.

It must also be argued that these uncapitalised individuals are the very best people in any society. Why?

For the simple reason that they see that it is their own natural imperative to compete as independent individuals in the wider society. They believe in free enterprise. They have accepted the challenge to compete.

The base, grass roots of society is thus starved of capital. If you do not believe me, take a walk through any poor area in, for example but not exclusively, the United States. Today, many at grass roots level see that the only way to gain access to the capital that they need is through being outside of a free society and into illegal trade in the likes of drugs; that the road to success is through unlawful activity rather than through lawful rivalry, free competition.

I believe that lack of access to capital drives lawlessness and there is much lawlessness today."





Here you go;

"Microcredit is the extension of very small loans (microloans) to the unemployed, to poor entrepreneurs and to others living in poverty. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of a wider range of financial services to the very poor.

Microcredit is a financial innovation that is generally considered to have originated with the Grameen Bank in Bangladesh.[1] In that country, it has successfully enabled extremely impoverished people to engage in self-employment projects that allow them to generate an income and, in many cases, begin to build wealth and exit poverty. Due to the success of microcredit, many in the traditional banking industry have begun to realize that these microcredit borrowers should more correctly be categorized as pre-bankable; thus, microcredit is increasingly gaining credibility in the mainstream finance industry, and many traditional large finance organizations are contemplating microcredit projects as a source of future growth, even though almost everyone in larger development organizations discounted the likelihood of success of microcredit when it was begun. The United Nations declared 2005 the International Year of Microcredit."

[Chris Coles]

Re: The Road Ahead from a Grass Roots Viewpoint

You said; "The majority do not have access to capital.

It must also be argued that these uncapitalised individuals are the very best people in any society. Why?

For the simple reason that they see that it is their own natural imperative to compete as independent individuals in the wider society. They believe in free enterprise. They have accepted the challenge to compete.

The base, grass roots of society is thus starved of capital. If you do not believe me, take a walk through any poor area in, for example but not exclusively, the United States. Today, many at grass roots level see that the only way to gain access to the capital that they need is through being outside of a free society and into illegal trade in the likes of drugs; that the road to success is through unlawful activity rather than through lawful rivalry, free competition.

I believe that lack of access to capital drives lawlessness and there is much lawlessness today."

Here you go;

"Microcredit is the extension of very small loans (microloans) to the unemployed, to poor entrepreneurs and to others living in poverty. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of a wider range of financial services to the very poor.

Microcredit is a financial innovation that is generally considered to have originated with the Grameen Bank in Bangladesh.[1] In that country, it has successfully enabled extremely impoverished people to engage in self-employment projects that allow them to generate an income and, in many cases, begin to build wealth and exit poverty. Due to the success of microcredit, many in the traditional banking industry have begun to realize that these microcredit borrowers should more correctly be categorized as pre-bankable; thus, microcredit is increasingly gaining credibility in the mainstream finance industry, and many traditional large finance organizations are contemplating microcredit projects as a source of future growth, even though almost everyone in larger development organizations discounted the likelihood of success of microcredit when it was begun. The United Nations declared 2005 the International Year of Microcredit."

In a way, I am being a bit unfair here as you in fact put up another example and then edited it out again. But I want to start with the original as it has lessons that are, I believe, already covered by the rules I have proposed.

You put this up:

Reminds me of the 2006 Ophra experiment, where a member of the 'grass root' society was given 100k;
http://www.associatedcontent.com/article/95216/a_homeless_man_blows_100000_of_free.html


One of the intriguing facts about the human race is that most humans find a stable environment they can survive in and stay there. A very good example, if extreme, are people that choose to live within the Arctic Circle. They have found somewhere that, for whatever reason, suits them. yes, if they simply walked South several hundred miles, they could live in a much better climate. But they choose not to. Why? I expect there must be several reference books written on this subject, but as I see it, everyone has to find a way forward that suits them as individuals. If you find a space that allows you to survive without outside influence, you hold on to it. So the poor man who lives on the streets is there because they like to live that way. I came across this when building my parking lot in the City of Salisbury. One individual who passed by every day I discovered slept in the old Cattle Market building in the pig pens. It took me two years to hold him in a conversation of more than a few moments of two or more sentences. His problem was acute shyness. I tried to get him to walk into the local social services and simply say: "I am homeless, please find me somewhere to live". Upon which, they would have had, by law, without any further hassle, to provide him with a home of his own, but try as hard as I could, he would not do that. I tried to get the local Social Services people to help him, but they were not prepared to do anything either. Their argument was they had enough to contend with without trying to change the way of life of someone that would not change. Before I leave the subject, he is clean, healthy, does not drink, yes his clothes are threadbare, but otherwise, he is as normal looking as anyone.

What I am doing is setting out a system for those that WANT to change. Have a desire to bring benefits to their local community via the creation of jobs which stem from their own perceptions of a new product or process that they believe there is a market waiting to sell into.

They cannot do that without creating employment. The primary trigger is access to a TAX record number for an employee. By the same token, they must have a local accountant that has done no more than pass their business plan as REASONABLE. The accountant is not expected to make any forecast as to whether or not they will succeed and cannot argue against any form of competition against any existing company. Again, to be able to form their new business, they will need to be a customer of a local attorney or solicitor. So right from the outset, the new rules bring professional oversight into the process of local job creation.

Micro loans work in their very specific environment where at all times, the recipients of the loans do not compete with higher scale business. I am not, nor do I have any interest in becoming; a micro loan business. I am very specifically aligned to the concept of the creation of a capital based society where the desire is to create employment in your local community through the capital investment of the local communities savings.

But of one thing we can say; micro loans have demonstrated that a concept that would otherwise be prevented from starting because others would say, from the outset, it would not work, instead demonstrates that no one can accurately predict what will and will not work without first trying it out.

Success comes in too many variations to be accurately predictable.

[Chris Coles]

Re: The Road Ahead from a Grass Roots Viewpoint

Before I turn to answer the question about the criminality, this turned up on BBC Radio 4 Point of View by Katherine Whitehorn. I believe this is as good as it gets when we start to look at why the present system is so disfunctional. I give a link to the text
http://news.bbc.co.uk/1/hi/magazine/...point_of_view/

And if you want to instead, listen, try here.

http://news.bbc.co.uk/1/hi/magazine/...point_of_view/#

"What has become completely irrelevant is any idea of scale based on us human beings. "

"The question of size is not just about organisational efficiency. It also affects what motivates people to do what they do."

"And in a globalised world, it tends to be the only way - that's the trouble. In the City there used to be such a thing as shame, but that was before it all went worldwide.

Being shown the money

In Edith Wharton's The Age of Innocence, set in mid 19th Century New York, the banker Julius indulges in some shady business - and no-one will speak to him at the opera. Socially, he is ruined.
There's nothing like that now: the financial world, like so much else, is just too big. Who, in our world, is going to make even suspected fraudsters like Madoff or Stanford feel ostracised and despised?"

[Chris Coles]

Re: The Road Ahead from a Grass Roots Viewpoint

Criminality; what is wrong with a system design that seems to promote criminality?

We need to recognise that there were some alarming effects caused by simply placing all that surplus prosperity entirely into the hands of a very small number, (relative to the size of the general population), of financial institutions. The actual number with PRIMARY (institutional) responsibility for the direct investment of savings, as new, invested equity capital; back into the nation must now run to perhaps no more than twenty individuals out of an Anglo Saxon population of some three hundred million citizens. That is one in fifteen million. And then, remember, that was for investment above a median of say, $100 million and below that level – NOTHING.

No, I was not talking about Venture Capital, (the recipients of the odd $100 million), where the number perhaps runs to a couple of hundred, I deliberately used the word PRIMARY, that is, within the main financial institutions. By far the majority at that level are trained from the bottom up to NEVER risk the capital in direct investment and to always act within a very strict set of rules set out by LAW.

Again, of the twenty or so major institutions world wide, I will be very surprised if there is more than a single individual in any one of them that has a primary role to ensure equity investment of any sort reaches the grass roots of society. Indeed, I suspect I am stretching a point in suggesting ANYONE is involved.

The primary unseen problem is that once you create a system that takes all responsibility for the direct investment of your savings out of the hands of the general population, and then does not provide any function within that system; no one, outside of a chosen few - has access to capital.

Remember, right at the very start of this thread I showed that The Times, London, Paper of Record for the United Kingdom no less; asked the question

– “where?”

Over the years a number of things intrigued me and a good example is that banks have to move their managers around frequently to stop them stealing customers’ money…. Why?

Goodness knows they of all people have no reason not to be able to get their hands on money for investment. After all, they are right at the heart of the money industry. Yet they are inclined to steal. Why?

I believe it is simply they are in exactly the same situation as everybody else; they cannot get their hands on investment either. There they are, right at the hub and cannot because there is no system in place that allows them access to the capital they need to do….whatever.

I will guarantee, someone takes all the water of the planet and holds it behind a series of dams where only a tiny proportion of the nation can have access to the water, criminality will take hold and people will use any and every means at their disposal to get their hands on it.

THAT is your problem. It is not that the general population is inherently criminal; it is simply that they are being prevented from gaining access to the primary input to free enterprise capitalism, capital.

Capital to free enterprise is like water for life, you cannot live as normal human beings without water, you cannot create new employment without capital.

You turn on a tap, (faucet), for water and think nothing of it. Now imagine that you live in a population of fifteen million and there is only one source of any water at all and they do not like the idea of someone as small and insignificant as you getting at ANY.

I will bet my right arm, you will become a criminal overnight.

You will also find that with a large population surrounding you that the variation of ideas as to how to get at that water will astound you.

Humans have advanced to where they are today as much because they have an inbuilt capacity to take on a challenge and find an answer.

We do not have any accepted mechanism to take our savings, of the local community, back as equity investment, into the local community, which in turn will permit the free expression of the honest free enterprise aspirations; of the local community. Instead we let them make us slaves.

PERIOD.

We all live in a supposedly capitalist system yet we have no access to capital and all lending money to people does is make us all slaves to debt.

Please, think about that.

In my next part I will set out a set of rules for the local communities to use to keep oversight in their local community investments and the potential for income, both at the local and national level, institutional and government.