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Posts in the ‘Virtual Feudalism’ Category

Startling statistic

Tuesday, January 21st, 2014

The World’s 85 Richest Now Worth as Much as 3.5 Billion Poorest

Full circle: state of nature to virtual state of nature

Monday, December 16th, 2013

by Abbe Mowshowitz
Image: The Ouroboros (Wikimedia Commons)

Writing in the mid-17th century the social contract theorist Thomas Hobbes characterized the state of nature as a “time of war, where every man is enemy to every man” and “the life of man, solitary, poor, nasty, brutish and short.” Unbridled competition was the dominant feature of this primitive condition, leading people eventually to accept agreements which placed constraints on their behavior designed to end the state of war, ensure personal safety and establish conditions capable of supporting the necessary activities of daily life. Social contract theorists such as Hobbes, Locke and Rousseau argued that such agreements are implicit in the rise of civil society. The accounts of these philosophers differ in important ways, but all agree on some form of contract as the foundation of society.

Social philosophers may no longer accept the historical reality of social contract preceded by a state of nature, but the latter concept is useful for establishing a starting point or base case for gauging human social progress. The instruments and capabilities of primitive groups for shaping the environment were insignificant compared with those of the modern world, but both primitive and modern share a common feature, namely their tolerance of unbridled competition. Advances in technology have not been matched by progress in the ways individuals and groups deal with each other. A glance at daily news reports of conflict and strife in too many regions of the world is enough to convince one this observation is true.

Economists argue that competition is essential to the proper functioning of the market economy. It stimulates innovation and development of new or improved products and services, keeps production costs in check and lowers prices to consumers. Experience since the dawn of the Industrial Revolution testifies to the accuracy of this argument. However, there is no such thing as an absolute good – something of which there cannot be too much – and competition is no exception to this rule.

Economic conditions in the wake of the most recent financial crisis begin to resemble the mythical state of nature. The stark realities of ruthless competition have come to the fore in this time of economic duress and Hobbes’ war of all against all rages once again. Virtual organization, made practicable by advances in transportation, information and communication technologies, has intensified competition in the global arena. Commercial activity on a global scale is certainly not new, but the ability to move goods, people and capital easily, quickly and cheaply has given it a historically unprecedented boost.

Virtual organization supports, encourages and demands switching to lower cost alternatives for satisfying requirements in the making of products and delivery of services. This may take the form of shifting production from one venue to another, selecting the lowest cost supplier of particular goods and services, using transfer pricing schemes to lower global tax obligations, and substituting one individual for another on a project team. All of these types of switching, and many related organizational or accounting tricks, exploit opportunities for taking advantage of competition in the marketplace. Desire for increased profits realizable through such exploitation urges practices that stimulate competition between firms and individuals, undermine loyalty to place and person, and contribute to the “war of all against all.”

Just as technological and economic innovations in an earlier period underpinned the evolution of the centralized nation state, current innovations are undermining those same states. The great nation states, despite their military prowess, are doomed like the dinosaurs of old, unable, unwilling or insufficiently nimble to meet the threat to their dominance posed by agile virtual organizations that have no sense of national identity. As national governments wrested power from feudal barons in the early modern period, virtual corporations operating in global markets are taking it back by making it all but impossible for governments to gather the resources needed to govern effectively. Added to this slow but inexorable starvation is the complicity of government officials who are in effect tools of the rising power elites. Regulators who keep a weather eye out for lucrative employment opportunities in the companies they are charged to regulate are not likely to be over zealous in promoting the public interest. Absent the protection of the state, we will converge inexorably to a virtual state of nature. So much for progress and the perfectibility of man.

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Signs of emerging virtual feudalism

Tuesday, October 22nd, 2013

“You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the company store”
From the lyrics of Sixteen Tons, popularized by Tennessee Ernie Ford

“Former President Jimmy Carter said Monday [October 7, 2013] that the income gap in the United States has increased to the point where members of the middle class resemble the Americans who lived in poverty when he occupied the White House.”

Read more:
Carter: Middle class today resembles past’s poor


“Magnetar Capital LLC, investigated by the Securities and Exchange Commission for its housing bets leading up to the property crash, acquired a rental business in January with about 1,900 properties [in Huber Heights, Ohio]. In April, its management company applied for the largest cut to property tax assessments in the county’s history. The move could curb funding for public schools, the police and fire departments and services to the disabled, said Montgomery County Auditor Karl Keith.

Private-equity firms and hedge funds have bought as many as 200,000 homes across the U.S., typically in areas hardest hit by the housing crash, to profit from soaring demand for rentals. What makes Magnetar’s investment unique so far is its focus, buying one in 11 homes in the Ohio suburb, magnifying its influence over the residents and the town’s finances.”

Read More:
Magnetar Goes Long Ohio Town While Shorting Its Tax Base


Also read:
Bodies Double as Cash Machines With U.S. Income Lagging: Economy

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First the workers, then the retirees – victims of the cut-and-paste management of virtual organization

Monday, August 5th, 2013
Library of Congress

Library of Congress

Pandemic of pension woes plagues nation
By John W. Schoen | CNBC

Detroit, you’re not alone.

Across the nation, cities and states are watching Detroit’s largest-ever municipal bankruptcy filing with great trepidation. Years of underfunded retirement promises to public sector workers, which helped lay Detroit low, could plunge them into a similar and terrifying financial hole.

A CNBC.com analysis of more than 120 of the nation’s largest state and local pension plans finds they face a wide range of burdens as their aging workforces near retirement.

Thanks to a patchwork of accounting practices and rosy investment assumptions, it’s not even clear just how big a financial hole many states and cities have dug for themselves. That may soon change, thanks to a new set of government accounting standards that could serve as a nasty wake-up call to states and cities relying on rosy scenarios and head-in-the-sand accounting.

Even less clear is who will pay to clean up the messes. Will it be the millions of retirees owed trillions of dollars in benefits, the bondholders who lent states and cities trillions more, or local taxpayers who may have to pay more to cover the shortfalls or see deeper cuts in public services?

Regardless, the painful process will likely play out for years.
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Property Protection for the Virtual Nobility

Sunday, June 12th, 2011

“For the Executive With Everything, a $230,000 Dog to Protect It”

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