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Failures of Capitalism and Democracy

By admin - Posted on 12 February 2011

Nanook (italics) is talking with Ben - From Scout to the Pole, Ch. 8
Headings with ** are also found in the novel.

Failures of Capitalism and Democracy

“OK. I’m sold. Capitalism is the answer. Let’s just make it happen.”

“Yeah. I wish things were so simple. But I’ve already told you, capitalism is NOT the answer. It has flaws all over the place. Let’s go back and look at the cornerstones of Capitalism: Private ownership, a market economy, competition, profit and stable prices.

Private Ownership – faults

Private ownership basics – diffused power, freedom of interests

Back to Ebenstein. Page 40:”

“Capitalism’s promotion of private ownership is based on two considerations. First, ownership of productive property means power over the lives of other people; it is better, from the capitalist viewpoint, that such power is diffused among many property owners rather than concentrated in one owner, the state. . . . Second, the basic capitalist assumption is that economic progress is best attained when people are free to advance their own interests and have the personal incentive to do so.”

Monopoly power

“So problem one is making sure that ownership of production, i.e. power over others, is widely diffused. This has been a major problem in western society and it has not been achieved.

At the end of the last century, the explosion of steam power, electricity and railroads produced the ‘era of the Robber Barons’. Once an organization reaches a certain size, it has the power to monopolize a market by blocking trade with smaller firms. That means it can keep growing and growing. To prevent the abuses that were observed at that time, the government established a law. In 1890, the Sherman Antitrust Act was passed as a federal law. Each of the states followed up with their own antitrust laws. The Sherman Act was followed in 1914 by the Clayton Antitrust Act.”

“OK. So? Didn’t that fix the problem?”

“Nanook! I’m disappointed in you. Didn’t we just go through a long discussion showing that CENTRALIZATION doesn’t work? That applies to both projects where the government is trying to achieve something, or actions where the government is trying to control something. And in the case of Antitrust, the control is placed in the hands of the COURTS. Did you hear that word? COURTS. Again, out of the pan, into the fire.

**The LAW is corrupt

OK. I have to say something important. So listen up. THE LEGAL SYSTEM THROUGHOUT THE WORLD IS THE MOST CORRUPT OF ALL THE MAJOR SOCIAL INSTITUTIONS. This includes the system in the U.S. Once a company gets large, it has a lot of money to throw around. That means it can influence the press and the public; it can also buy corrupt judges and corrupt congressmen. The bigger problem, however, is that since the congressmen and lawyers control the words that make up business law, they have direct control of how business is run in this country. I’m not only talking about restraining monopolies. They control everything! We talk about the U.S. being a FREE society and having a FREE MARKET. FORGET IT! This is just one more BIG LIE. The government controls business to the last penny. Of course they tell the public that we have a free market and that they exert minimum influence on business. But it’s a big lie. Every single element of business operations is subject to one law or another.

And don’t think any of this is fair! If you’re at the bottom of the heap, your wage is controlled. It is set by the minimum wage law. Have you ever heard of a MAXIMUM WAGE LAW? Not a chance.”

Minimum wage

“OK. Let me jump in here. I don’t understand this last point. It would seem to me that there is a big difference between setting a minimum wage and setting a maximum wage. I mean, it seems to me that setting a minimum wage is actually a good thing.”

“OK. Why?”

“Why? Because that means an employer can’t hire people and pay them dirt.”

“So, you think a minimum wage law helps people?”

“Yeah. How can it not help people.”

“You’re falling for another BIG LIE; single sentence logic. Come on, think SYSTEM. Let me give you an exaggerated example to help you think this through. The minimum wage law everyone thinks about is a federal law. It sets the lowest wage for the whole country. But states and cities can also set their own minimum wage as long as it’s higher. I recently read where some town in Massachusetts set the minimum wage for city landscapers at $10 per hour. So, think this through on a system basis.”

“$10 per hour. That’s more than a degreed engineer from MIT will get.”

“So what? If you believe that setting the minimum wage is good, then why not set it high?”

“Hmmm . . . . OK. So, let’s assume the Massachusetts town doesn’t have enough landscapers for all their needs. They then have to go out and hire people. As soon as they post a grass mowing job at $10 per hour, there will be a line of applicants all the way up to New Hampshire. That seems pretty good. They can pick and choose the best ones.”

“I can see it’s time to go back to the closet and get some more boots. Keep going. Your mouth is babbling wider open all the time.”

“Yeh. I’m starting to see the problems. I guess grass mowers can only get so good. So it wouldn’t make sense to hire PhD arborists to drive lawn mowers, even if they applied. Then there’s the problem of paying these new people. I mean, if there are 2,000 acres of grass to cut, it’s going to take the same amount of time to run lawn mowers over it no matter how much you pay the drivers. So, now the city has to fork out a ton more money. Which means tax rates have to go up. Which of course is going to aggravate everyone because they aren’t going to get their grass cut any better. It also means guys like me, who could get summer jobs with the city when more grass needs to be cut are out of luck. They couldn’t possibly pay part timers $10 and hour. And at $10 an hour, they would be attracting engineers, who they’d have to take because of their better credentials. BUT! That means the engineering companies in the area would lose workers. It also means that people with low skills won’t be able to find jobs. The lower skilled jobs will fill up with high skilled workers and the low skilled workers can’t do the engineering jobs.”

“Are you done?”

“Well I’m as done as I need to be. $10 an hour is going to cause a nightmare.”

“And that’s the same kind of thinking you need to do no matter what level the minimum wage is set at. If the minimum wage is set too high, special favors will be handed out to fill jobs and a black market will develop to fill the need and all kinds of disruptions will occur. And how can one number, one minimum wage value, be set to apply for all types of jobs and for every location in the country? Should the minimum wage be the same for a subway driver in New York City as it is for a fence painter in No Luck Lake in Alaska?”

“OK. OK. I hear you. So how would you set minimum wages?”

“That’s a long discussion for a later time. But let me just say for now, that the ANSWER to this problem, like MOST OF THE PROBLEMS THAT THIS COUNTRY FACES, is not to just fiddle with the existing structure. That is, the answer is not to find an ‘optimum’ price for a minimum wage, or even to set different ‘optimum’ prices in different places for different jobs. Once you start doing that, you might as well ask the Russians to tell us how to really screw it up. In short, I would trash the whole idea. Get rid of minimum wage. The answer will be found in a very different approach.

Maximum wage law

So, what about my question about a MAXIMUM WAGE LAW.”

“I didn’t think you were serious about that.”

“Well I am. It’s one thing for society to implement a system to, quote ‘give people an incentive’ to do something. It’s another for a corrupt system to put in place a ‘legal system’ to let the members of their elite club practice financial gluttony. This is especially blatant when the rewards for people in relationship to management don’t match performance in the company. Let me get another book. . . . . Ok. Sex, Lies & Politics by Larry Flynt. Page 238:”

“A recent Towers Perrin study showed that the salary spread between the average CEO and the average worker in Japan is 10 to 1. Between the average German CEO and average German worker it’s 11 to 1. In Canada, it’s 21 to 1; in England, 25 to 1. But in the land of the free and the home of the brave – that would be the United States – the average CEO makes a whopping 531 times what the average worker does.”

“What??? Did you say 531 times???”

“Open your ears, man! I didn’t stick boots in your ears. And this is totally legal in the system of business which has been designed by the U.S. government. And note, this number is an AVERAGE number. For U.S. businesses, you are looking at blatant greed. And the people in this country are just sheep to the slaughter.”

“Before, when you said our legal system was corrupt, I thought you were exaggerating. 531 is way beyond any moral justification.”


You really have to open your eyes. While we’re on corporations, you should know a few more things about them. When you hear the word CORPORATION, what do you think that means?”

“Corporation? It means a company – usually a large one.”

“OK. We’re starting from the basics on this. A CORPORATION is a specific type of company. It’s financial structure and top level management structure are controlled by law. The key feature of a corporation is a structure that separates OWNERSHIP of the company from MANAGEMENT of the company. In a FOR PROFIT corporation, the company is legally owned by the STOCK HOLDERS. In a NON PROFIT corporation, the company is legally owned by itself. To contrast this, in a company that is not a corporation, it can be owned by anyone. There can also be PRIVATE for-profit corporations and PUBLIC for-profit corporations. Got that?”

“I think I’m sorry I asked.”

“OK, forget the non-profits for now. I’m trying to get you to understand just a few points. Let’s just talk about FOR PROFIT corporations. For them, the second important thing that defines them is that they are allowed to issue stock. Not just any company can issue stock. To issue stock, the company has to be INCORPORATED by the laws of one of the states. Once that is done, how stock is created, issued, recorded, bought, sold etc. is very tightly regulated by law. That’s where the stock market scam I told you about is set up and controlled.”

“OK. Makes sense.”

“The third major principle of for profit corporations is the creation of a BOARD OF DIRECTORS. This group of people represents the stock holders and essentially decides how the company is to be run. They have decision authority. It is the Board of Directors that selects the senior MANAGERS of the company such as the President, Treasurer and Secretary.”

“OK. Makes sense.”

“And finally, the fourth major principle, all of these people I’ve mentioned so far, by LAW, are given IMMUNITY from individual prosecution for acts taken by the corporation.”

“Ok. Makes sense. . . . . . . Ugh? . . . . hold on here. Did you just say, the law gives all these people IMMUNITY?”

“So, you were listening after all. Right. That’s what I said. The law gives each of the individuals who own and operate a corporation immunity from personal liability for corporate actions.”

“Wait now. Does this mean a corporation can just go out and commit crimes and there’s nothing that can be done about it?”

“No. Not at all. In fact, by law, a CORPORATION is viewed very much like a CITIZEN. So they have to comply with all the laws a citizen must comply with.”

“Are you sure of this? That a corporation is viewed like a citizen?”

“Why? Don’t you think that makes sense?”

“Not a chance. Not even close. For starters, one of the major forms of pressure the government exerts to control people is that if a person gets too far out of line, they will be arrested and put in prison. So, how are you going to put a corporation in prison?”

“Bingo! This whole idea of treating a corporation like a citizen is bogus. Most of the restraints of the law used on citizens can’t be used on corporations. Here are a few more, quote ‘loop holes’. A citizen has the influence on society of ONE PERSON. A corporation can influence society with the voice of thousands. The one person, one vote principle is trashed.

The ‘one-person’ citizen also has to interact with society through a democratic process of open discussion. The thousands of voices inside a corporation are controlled by a dictatorship run by a very small group of elite managers, who themselves are immune to personal prosecution. Let me read from Ebenstein again. Page 50:”

“In the economic realm, a situation prevails that runs counter to the basic concept of democracy: corporation managers wield far-reaching power over stockholders and employees, and they constantly make decision that affect the public interest without any clearly defined responsibility to the public. In a democracy, political policies are determined by processes of consent that begin at the bottom and move up to the top, whereas in a corporate business, economic policies are made at the top and passed down to the bottom. The character of modern industrial organization is hierarchical, founded on discipline and obedience. The traditional pattern in industry has been considerably modified by union negotiations, legislation, and public opinion.
Like other empires, industrial empires tend to become bureaucratic and conformity minded, to follow routine and precedent and, above all, to transform personal initiative and enterprise into impersonal rules of administrative routine. While the original individual capitalists were bold, daring, and adventurous, the present bureaucratic administrators of modern industrial empires tend to put security above everything else. While risk-taking was one of the characteristic traits of original capitalists, corporate business leaders today prefer the riskless investments of ‘safe bets.’ The danger is that as a business becomes bigger, the free enterprise system may gradually become a ‘safe enterprise’ system.
In many respects there is less difference between large-scale capitalist enterprise and large-scale socialized enterprise than between small-scale capitalist enterprise and large-scale capitalist enterprise. Such defenders of capitalism as Justice Louis Brandeis and President Woodrow Wilson were afraid that the ‘curse of bigness’ might eventually destroy not only big private enterprise but private enterprise itself.”


“You did say that patterns in industry have been modified by union negotiations, right? So, won’t that fix a lot of the problems of centralized power?”

“Come on, Nanook. Where’s your brain? Labor unions, while they initially did a lot to improve safety and working conditions all across industry, for which they are to be well praised, have since just become one more driver of centralization. The unions don’t promote individual voices of their members. They present a single unified voice that talks to the single unified voice of the corporation resulting in a single unified agreement. CENTRALIZATION! Bad deal. Here, let me read a little history from Ebenstein. Page 58:”

“The National Labor Relations Act, commonly known as the Wagner Act, established full statutory regulation of labor-management relations for the first time in the United States. In the preceding half-century, the employer in the United States was free to recognize or not recognize labor unions and to bargain or not bargain with them. Employers frequently discharged employees for union activities, and if unions became too strong, employers would use various means to break them, including company unions, private police, labor spies, lockouts, and professional strike breakers.
The main purpose of the Wagner Act was to encourage collective bargaining between labor and management, thus substituting peaceful discussion for violence. Although the law did not, and could not, compel both sides to agree, and strikes and lockouts still remained legal, the experience of collective bargaining quickly resulted in a dramatic decline of violence in labor disputes.
Dissatisfaction of management with some provisions of the Wagner Act led to its replacement in 1947 by the Labor-Management Relations Act, more commonly known as the Taft-Hartley Act.”

“It seems like the key benefit here was to reduce the violence during strikes.”

“Correct. But this whole union process really cast a big black cloud on the country. As I said, it further entrenched centralization of control. It created a whole new management caste – the union management – and gave them powers that were not directly tied to market forces. There’s a strong parallel to our discussion about setting a high minimum wage. So as time goes on, unless the unions become very progressive in their approach, they will just bring in more socialist concepts and strangle innovation and efficiency.”

“Here’s that socialist word again. You’ve really got a thing about that don’t you!”

Monopoly power - Socialism – achieved through centralization

“You’d better believe it. And figuring out ways to keep our economy healthy depends on really understanding this problem. And the problem is a big one. At this point in history, the result of all the government meddling has just legally entrenched the elitism of government, corporate and union management in the U.S.. The workforce, like a bunch of sheep, just goes along with it because they are brainwashed to believe the union is acting in their best interest. Sure working conditions, like safety and hazardous environments, are quote ‘better’, but the fundamental capitalist principle of distributing management power widely over others in industry has not been achieved.

The U.S. Government itself has become the largest employer with 2.7 million employees. WalMart employs 1.8 million. According to a report from the Labor Research Association, the U.S. has over 5 million employers. But 50% of the workforce is employed by just 3.5% of all companies. 27.3% of the 115.1 million work force are employed by just the largest 930 companies, each which has more than 10,000 employees. That is, just 0.02% of all employers control 27.3% of the work force. And I said, ‘point zero two’ percent, not two percent. Put in different terms, just 930 groups of elite managers control over 31.4 million workers.

Ebenstein makes some similar points. Page 51:”

“To get some idea of the role of big business in the American economy, consider that the 500 largest industrial corporations account for 80 percent of total U.S. industrial sales, for 75 percent of all profits in industry, and for 75 percent of employment in all industrial corporations. In some major non-industrial sectors of the economy - such as banking, life insurance, and public utilities - concentration of ownership and control is even greater than in industry.”

Capitalism assumptions

The second basic capitalist assumption is that economic progress is best attained when people are FREE to advance their own interests and have the personal incentive to do so. What do you think about that?”

“I guess a key question would be are people really FREE to even understand what their own interests are? If we are all being brain washed and led with propaganda, then we’re not going to do too well even understanding what our own true human goals might be.”

“Good boy, Nanook. You get a gold star. Now you’re using your head. Good answers are not usually just yes or no to the first question that comes into your head. The people in this country are being led by media advertising and political lies. So, they might have, quote, ‘free choice’ in what they buy or who they vote for, but the whole selection of what they can buy or who they can vote for is heavily narrowed by heavy advertising pressure and tight political party control. You do know that the Russians have always had free elections, right? So, doesn’t that make them democratic? Unfortunately, they only have one person to vote for. Which, of course, means they can never be a great country like ours. We, after all, get TWO people to vote for.”


“So, are you saying the government should CONTROL advertising?”

“Oops! Give that gold star back. You’re just fiddling with the existing structure. There’s no creativity in that.

NO. We want the government to control as little as possible. The reason that advertisers are able to get away with their political manipulation is what I told you before: society, as a culture, has not figured out how to manage advertising yet. And society’s so called, quote, ‘leaders’ have their hands in the till.

So, when our culture needs to figure something out, where do you think they should turn?”

Free choice - Solutions - government

“Where do I think we should turn? . . . . . Where do I think we should turn? . . . . You know, this is actually a very tough question.”

“Bingo! Here’s the gold star back. You’re completely right. Keep talking.”

“Well, my first thought was to ask the government. But I finally think I understand why my mouth is so full of boots. Turning to the government is a knee-jerk reaction we have all been brainwashed with because the government wants it that way. Maybe a better government might do it someday, but not the one we have. So the next fall back is the schools. They should be teaching us to think.”


“But you’ve already made the point that education is controlled by the government and the media. So as long as there is this big ‘de facto’ conspiracy out there, I haven’t got a clue.”

“Don’t feel so bad. This is a huge problem. How do you change a corrupt government? And I don’t want to sound like I think every part of U.S. government operations is corrupt. Some of the basic principles are sound; some of the legislators and most of the government workers are good people. But most of our principles are fundamentally flawed and need to be fixed.

So, let’s keep clicking off institutions we would EXPECT to have a responsibility to fix this.”

Free choice – solutions - colleges

“OK. The colleges.”

“Right. They should be thinking this through and continually proposing solutions. It’s not happening. The colleges have gone on the government breadline. They don’t want to chance hurting their grant flow. So they will make the smallest, trivial advances they can that will still keep the money rolling in.”

“OK. Ummmm … how about the churches. They should have a major thing to say about the goals of society, social values and things like that, no?”

“VERY GOOD. They do. And in fact, they’re all over it. But what kind of message would the churches bring to the government?”

Free choice – solutions - religion

“Hmmm… . . Well things like banning obscene books or stopping sex from being taught in the schools.”

“And which religion would be doing that?”

“Well, all of them, of course.”

“Boy has the Catholic Church brainwashed you. What do you know about any of the other religions?”

“OK. Actually, not much. I mean I’ve heard about a lot of different religions, but as Catholics, we’re not allowed to know much about any of them. They’re all just heresies.”

“I’m glad to hear you admit that’s what you think. I’ll leave it to Father Vincent to talk to you about that. Let’s just say, when it comes to telling the government to do anything, the churches are on thin ice. They can’t even agree among themselves on the most basic principles. So the government has a real problem with multiple religions. And most of the things the government does to pander to one or the other religion is because of corruption in the government. Even with something as sensitive as sex education in the schools, the Christians can’t present a unified front. The Catholics want the government to prohibit sex ed. But the Southern Baptist Convention, a very big and powerful group, is totally against that. It’s not that they endorse sex ed. It’s that they don’t want the government to start down the slippery slope of censorship, especially under a banner of Catholic leadership. So, there’s a lot of commotion in the press, but you’re not going to see a united religious push on Washington or from the Colleges. A lot of pushing for their own agenda, yes! But not united.”

“I still don’t understand? Why not? I think religion has a huge effect on how we live our lives.”

“Totally right. But the religions don’t agree on how humans should live their lives. In fact, if you look around the world, you’ll see, more often than not, they’re at war over it. To achieve a united front, the religions are going to have to resort to LOGIC to deal with the problem of public debate. And, if they approach the colleges, they are going to have to open the Pandora’s box of critical thinking. It would be a major conflict of interest for them. The last thing the churches want is people making decisions for themselves based on critical thinking.”

“Ughhh . . . right. Why didn’t I think of that. So, I guess I’m out of options.”

“That’s what I meant. This is not an easy problem and it will take a lot more time to explain it well. Theoretically, I would go to the schools – both the colleges and the primary schools. But not in their current structure. As I said, long discussion for another time.

Capitalism - Personal incentive

So what about part two of the private ownership question: personal incentives. Do you think we have those?”

“OK. Just as complex I think. I mean, if my personal interest was to start a business building robots, but the big companies had that field locked up, I might not be able to launch a new business. So, it might seem like an incentive that a person has the ability to start a company, but it may be blocked by others already in there.”

“And what about by laws? The government controls every aspect of your life through taxation, through permits, through laws on safety etc. The whole concept of incentives cannot be viewed in isolation. Sure we have some. But when almost every decision a company makes has to take into account taxes and restrictions, to the point that the rules drive everything a company does, not the good of society or even the best situation for their workers, then the fundamental goals we have been told we have, have been lost. And as I’m sure Bill Foster will tell you, there’s all kind of rhetoric about support for creativity out there. But when the average guy tries to grab on to any of that support, you quickly find it’s already wired into specific channels for the big guys and colleges. So, given the limits to private ownership, lack of freedom to advance personal interests, and lack of personal incentives: three strikes, you’re out man.”

“Man yourself! This is unbelievable. And we’ve only covered the first cornerstone!”

Market economy – faults

“Ok. New topic. Let’s talk about the MARKET. Let me repeat from Ebenstein:”

“The market economy of the capitalist system is based on specialization of labor. Each person supplies only a fraction of his or her needs through individual skills and labors. The products or service are designed not for the producer’s own household, but for the market. As to prices, supply and demand determine these. . . The comparatively unregulated operation of supply and demand is a most fundamental principle of the FREE MARKET economy. . . Under fascism and communism, the government tries to plan the whole economy, but in so doing, it encounters limitations on the span of its control. No planning group can anticipate all the possible contingencies in an intricate economic system that encompasses millions of people. … In the capitalist market economy, each decision-maker watches over a vastly smaller area …”

“So, what do you think? Does the U.S. have a FREE MARKET economy? No way. The people in our country are BLIND! The term ‘free market’ is Single Sentence Logic that people throw around to hide their denial about the restrictions they have to personal freedom. If you push economists to define a ‘free market’ and then say whether we actually have it or not, they will run away and hide. A market can only achieve the theoretical definition of FREE when choice of products to produce is unregulated, choice of products to buy is unregulated, distribution is not controlled, transactions are not controlled and complete information is available about all of this to all people. We don’t have any of that in this country. Every product manufactured in or brought into this country has to comply with a hundred regulations. A perfect example is liquor. Where it can be made, what can be made, the amount of alcohol, how it is labeled, tax stamps, distribution channels, interstate restrictions, where and when it can be sold, where and when you can buy it, where and when you can drink it – every step is controlled.”

“You know, I never thought about this. In fact, I can’t think of a SINGLE product that doesn’t have a huge number of limitations.”

“That’s my point. And as long as people keep believing this SCAM idea of a free market, they will never be able to sit down and figure out the puzzle of how markets should be controlled in a modern civilized world. And this ignorance is the culture that the people in control want to maintain. And as long as there is so little market freedom, prices will never approach the theoretical low levels that the free market concept is claimed to achieve.

Competition - faults

“Next item, the concept of COMPETITION. So, tell me what you think the role of competition is in our society.”

“Hmmm . . . Sure. Actually, competition is all over the place. Competition keeps prices low. Competition pushes people to do better. It pushes companies to continually develop new products and to keep lowering prices. It pushes students to work harder in school. It gives athletes an incentive to push themselves to be better than others.”

“OK. Not bad. So, is it a good thing?”

“Good? Hmmm…. I’d say . …. sure. Competition is good.”

“Actually, that’s mostly right. Competition is truly a cornerstone of Capitalism. And, Americans have been brainwashed from day one to believe that competition is the solution to everything. So, you’ve been brainwashed into the fold. The more the merrier. Using single sentence logic, COMPETITION IS GOOD, period! And I’ll be the first to say that the proper application of competition IS one of the KEY TOOLS to keep our entire culture efficient. But! If you question how it’s applied in society in more detail, it’s a house with closets full of skeletons. Let’s look in just a few of those closets.

Competition – too many government bidders

Everyone knows that the government goes through great lengths to get multiple bids for contracts. Seems to make sense, right? In fact, at first glance, it seems the more bids they get, the better. That way they can get a lower bidder. But this is very narrow minded thinking.

Preparing bids for projects takes a lot of effort. That effort costs a lot of money. Let’s say there are 10 bids for one job. One company wins. Ra! Ra! The American way. But what about the 9 other companies who lost. Those 9 other companies have just taken a big financial loss. I’m not saying this just because they didn’t win income in the future. They just lost all the money they invested writing the proposal. Let’s assume that all of these companies are actually competent companies – about the same ability. If these same companies keep going through this process over and over again, and they each win, on average, about 1 out of 10 contracts that they bid on, that means they have to continuously absorb the amount of money they loose to prepare 9 out of 10 contracts.”

“Hmmm …. I never thought of that.

“Well the government has thought of that. So when a contract is won, not only does the government pay for the work listed in the contract, at a fair rate, they also allow huge, , ‘administrative fees’, so that these companies can recover their huge on-going bidding losses.”

“OK. I never thought of that. But I do understand it. But how big can these administrative costs be? So what if they add 10% or 15% to a contract. That seems reasonable.”

“Hah! Ten or fifteen percent. You don’t have a clue. Try 250%. I even saw a contract where the administrative fee was 430%. That is, the administration expenses approved were going to be 4.3 times as much as the total labor cost to do all the work. So, for example, a contract is placed for an engineer to work one year. His salary is going to be $8,000. With benefits, that’s $10,000. But on top of that, there is a $43,000 administrative fee for a total project cost of $53,000.”

“No wonder government contracts are so high.”

“High! You don’t have a clue! If there were more than 10 bidders, the losses would be higher. I remember a case where there were 100 proposals for each award at the National Institutes of Health. That means, society paid 100 times over for the proposal that won in that cycle. Are you just going to go along with that?”

“That’s unbelievable! I understand your argument, but what other choice is there?”

“Come on, Nanook. There are a lot of other choices because there are so many things wrong with the way this is currently being done. And the major reasons for all these wrongs are: a. there are so many squabbling idiots out there who can’t carry more than one thought in their heads at a time, and b. there’s money to be made! This is a system problem. And the goal of optimizing the system in favor of society is lost when individual corporate greed comes up. So where does the government take a position? On the side of society? Not a chance. They come down squarely in the corporate camp. And remember, this is NOT an enlightened camp. The corporations are run by pretty narrow minded people each focused on maximizing their salary. So they don’t care about waste in society or even waste in their own corporations. They are only watching out for number one. And the result is massive waste everywhere.

But, let’s not go down this rat hole here. My original point was that simply thinking COMPETITIVE BIDDING IS GOOD, is Single Sentence Logic. It’s a much more complex issue than that. AND, a lot of issues in society are just that complex. If the people, as citizens, don’t have the ability to understand complex issues, or they are too lazy to investigate the issues, then the government is going to pull the wool over their eyes every time, and the corporate leaders are going to run off with their lunch.”

“OK. But don’t leave me just hanging here. Tell me at least one better way to do this.”

“OK. Let’s ask some questions. What’s wrong with letting these companies do a lot of proposals if, in the end, they get paid for it?”

“Well, staying with your 1 in 10 example, and you said all the companies were competent, at least engineering wise I guess, then all the creativity in the 9 loser proposals gets lost.”

“Perfect. That’s one example. So, how could you fix that?”

“I guess you’d want to make all that creativity available to the winner to use. But boy, what a can of worms. If everyone knew that was going to happen ahead of time, they wouldn’t put any of their real clever ideas in the proposals.”

“Come on Nanook. Don’t give up so easily. Why wouldn’t they want to give up their great ideas?”

“Why wouldn’t they want to give up their great ideas? What kind of stupid question is that?”

“Come on Nanook. Humor me. Why?”

“Because they’re running a company. Great ideas are the key to them making money.”

“But you didn’t say they should just give the ideas away. You just said they should be made available to the winner.”

“Hmmmm…. So, for example, the winner gets to see all the creative ideas, and gets to use them, but they have to pay the originator to use them.”

“Now, that wasn’t so hard, was it? So, why hasn’t society done something like that? Let’s look at how human psychology leads into this.


Have you ever heard the idea called the ‘win-win’ approach?”

“Sure. So, now I see where you’re going with that. Now the, quote, ‘losers’ turn into winners. They don’t get the whole pie, but they actually don get paid for their creativity.”

“Correct. And the more of that, that goes on, the less the government has to give everyone in ‘administrative fees’. But my major point is, the delivered product finally ends up better because it uses the best ideas of 10 companies instead of just one.”

“Well, doesn’t this sort of happen anyway? I mean, a lot of aircraft have parts from many companies.”

“Sure, but the process ought to be made formal and applied to the whole range of government contracts and grants.”

“OK. Fair enough. There’s a lot of improvement that can be done.”

“Bingo! But don’t just get stuck thinking this is a one issue solution. There’s a broad principle I laid on you. Did you get it?”

“YES SIR. I sure did. SYSTEM THINKING for one. Minimizing waste to the whole society, I guess, is another.”


“Bingo! EFFICIENCY! Start remembering those major principles. Some competition is good. With our current system, too much is bad and the waste grows in proportion to the number of losing competitors. And this same approach doesn’t only apply to the government. It should apply to every part of our society.”

“OK. I can understand how it might work with big government contracts. But how would it work with universities. These guys are as secretive as can be. Publish or perish and all that.”

“Another can of worms, for sure. But who are we blaming for this, the Martians? This is a problem of our own making. And it isn’t getting solved because greed, ignorance and corruption are in charge. No one is looking at the SYSTEM ISSUES.”

“But, no one has ever, really, done that, have they? I mean, no one ever actually SET UP a society. Every thing we see sort of just happened on its own. It evolved from some more primitive model.”

“Oh yeah? Did you ever hear of a thing called the Constitution of the United States? Wasn’t that a new beginning? Clear the decks and let’s get it right from square one?”

“Hmmm … I must be getting hungry again. How about jamming a few boots down my throat!”

Cooperation – too many bidders – commercial

“You’re OK Nanook. Do you see how simple it is to overlook stuff. I’m not saying it’s an easy process. But we can do a whole lot better than we are. When there are too-many-bidders, competition fails in the commercial world just like it does in the government world. This happens when greed drives too many companies to rush in to grab part of a new market.”

“But isn’t this the way competition is supposed to work? New companies come in with better products and drive the other ones out of business. That’s how capitalism is supposed to work, right?”

“Single Sentence Logic! And what happens to the workers in the companies that fail?”

“Oh! I see what you mean. Maybe they can get unemployment for awhile, until they find another job with the better company?”

“And, what happens when the competition isn’t in the same town? What if a new more efficient lumber mill opens up in another town?”

“Hmmm… I see what you mean. Then the town collapses.”

“Bingo! Too bad about all those peon workers. But there is another, much more sinister catastrophe that happens way too often. What would you do if your company was being squeezed out of a market?”

“I’d find out why and do a better job.”

“Right. But most people aren’t like you. What if, instead of doing better, a company tries everything they know and are still failing? Don’t you think they might get desperate? Don’t you think they might decides to go to the dark side? What if they start cheating on their accounting, lying about their quality, robbing their suppliers. Then what?”

“Well, I guess they eventually get caught.”

“Eventually, maybe. But what happens in the mean time? What if they’re paying off the police and the courts? What happens when the company that is operating in illegal ways brings their prices down? What happens to the other companies in the area?”

“Ah! I see where you’re headed. The good companies have to match that. And if it’s illegal methods that give the first company a big lead, then the other companies, who will probably figure out what’s going on, will also have to go to the dark side to survive. I mean, because they can’t go to the authorities who are part of the scam.”

“Bingo! So, you’ve got a strange problem here. If the legal system is part of the problem, which I claim is always the case, then all it takes is one rotten apple to bring the whole industry down.”

“And I’m guessing you’re implying that this happens more than people want to admit?”

“Hello! Las Vegas? Organized crime? The unions? But it also explains the demise of major industries – banking scandals, investment scandals, the collapse of medical care, the sell-out of the universities.”

Cooperative competition

“What? What do you think is wrong with the universities?”

“This is another all day discussion. But let me just comment on the competitive part. I want to introduce you to a new concept. I call it COOPERATIVE COMPETITION.”

“Cooperative competition? Sounds like an oxymoron to me.”

“Right. So, here’s an example. Two runners are, quote, ‘competing’ in the Olympics. Are they actually competing?”

“OK. OK. I can’t help smiling. This is genius. Sure, they are competing. Each wants to win the gold medal. But there’s a whole second issue going on. In such an event, I’m going to run my best when I’ve got someone else right on my heels pushing me. So, in a way, my competitor is actually my best supporter.”

“Bingo! Yes, you are ‘competitors’ in some form. But you are also cooperating. And, in this case, there’s an easy rule to understand why. In this case, the true challenge for both of you is NOT beating the other guy. It’s not the Gold Medal. The challenge is the CLOCK, or the yardstick, or an accuracy measure. It is something outside of you that creates a WIN-WIN situation if you support each other.”

“So, if you call this Cooperative Competition, what do you call the other kind.”

“I call it PREDATORY COMPETITION. With a predatory system, one person can only win if another is hurt or destroyed.”

“But this seems to be the way most of our society is structured.”

“BINGO! And when is society going to figure this out?”

“Hmmm . . . but . . . well . . . . ugh . . . .”

“Having a hard time with those boots in your mouth, are you? Look, Nanook. Again, I’m not saying this is easy. But current society is selling out to greed, corruption, religion and superstition. We’re going back to the dark ages. We’re turning our back on logic and reason. Think GREEKS! That was the most shining philosophical and social revolution in the history of man. Humans haven’t lost the ability to have great thoughts like the Greeks did. We are just selling out.”

“OK. But, it seems . . . I mean . . . so, how can we all cooperate without also becoming socialist?”

“Alright. I won’t pick on you this time. To really understand this, a person has to study it some so the language becomes intuitive. Your question isn’t actually so hard if you go back to the Olympic model. And by Olympic model, I’m not talking about all those subjective events that have been added on, like ice dancing. Stay with things that are measurable. Also stay, for now, with things that seek to break new ground.”

“OK. What about the phone company. The government ought to break that monopoly up and let lots of others compete. So, how do we make that parallel to the Olympics?”

“The first approach is to actually look at how the Olympics is structured. For example, no one thinks much about the infrastructure. The track they run on, the pools they swim in etc. Those are always state-of-the-art. But no companies are living or dying building those. So, with the phone company, they probably ought to divide the cutting edge challenges from the basics. Let one part of the industry take care of the copper wire and telephone poles. Let another group of companies make the components. But let the universities and other industry companies, compete to develop new products.

Competition - predatory - need for limits

So, let me summarize this. When predatory competition is allowed to run without restraint, it has fallen into an authoritarian, single winner evolutionary model focusing on business interests. The goal is to make a few business owners very wealthy. It is NOT focused on optimizing the value for the society. If we were doing that, the only underlying goal would be to stimulate enough initiative to develop new products at a healthy rate.


“Keep going. The universities and industry developers will still try to eat each other alive.”

“Correct. But there’s nothing wrong with that, as long as there is a mechanism to make sure they are rewarded for making new breakthroughs rather than killing off a competitor. And, in fact, there is such a mechanism. It’s called the patent system. With patents, once you make a breakthrough, you are rewarded for that breakthrough for a specified period of time – currently 17 years. Someone else can use your invention, but they have to pay you for it.”

“I see what you mean. This is tough. But I haven’t spent much time thinking about it either.”

“Unfortunately, while the concept of a patent system in the world has a lot of merit, the implementation has a lot of major flaws. For example, just a small improvement might create a new product feature that people really want. So company B produces a new product that has the new feature. But, company A’s product had many good features as well. The new product can’t use them because of patent protection and the old product can’t be revised to use the new improvement for the same reason. So the consumer always get’s caught in the crossfire and get’s screwed with a sub-optimal overall product.”

“So, you’re saying, the patent system is implemented in such a way that it creates this deficiency?”

“Bingo! So this needs to be fixed. The Japanese actually handle this much better than we do. While they have patents, their general approach does not block companies from using other peoples inventions. What they do require is that companies who use a patented idea compensate the inventor company. So, all the players are going to benefit by every new improvement. The inventor company gets a royalty; the production company sells products; AND the consumer gets the best overall value. WIN – WIN – WIN. And the KEY principle here is what?”

“Hmmm. . . Oh yeah. VALUE! Just like in the stock market discussion.”

“BINGO! You’re OK Nanook. VALUE. Always design the overall system to reward VALUE CONTRIBUTION rather than domination. There is so much we are losing by blindly applying the predatory approach. Consider the whole way we handle politics. Each political party supposedly selects the BEST candidates AND the BEST resolutions to current social problems. We then hold an election focused on just 4 people, two sets of Presidential candidates. The results come in, often pretty close to 50:50, which means the public believes the two sides are about equal. There’s only a slight difference. Then what happens? We only use half of the best. We throw the other half of the best people away and half of the best solutions as well. ‘To the victors go the spoils!’ Sure. And the public gets screwed.

Bankruptcy – upper class rewards

But the greatest tragedy of all is in general commerce. Most people don’t understand the basic principles of how capitalism is supposed to work. One of the basic principles in the free market is that good companies are supposed to grow and succeed, while lousy companies are supposed to shrink and FAIL. What do you think about that?”

“I don’t know. I guess it makes sense.”

“ Think, man! Use your head!”

“Hmmmm . . . “

“OK. I’ll give you a hint. Think SYSTEMS. Think about all the parts.”

“Hmmmm . . . OK. Every company that fails is made up of lots of people. They can’t all be bad. In fact, from stories I heard from Bill, MOST of the people in companies are good people. The reason companies fail is because of poor management.”

“Right. So, what happens to all the working people?”

“OK. OK. You’ve made your point. In the current system, I can easily guess. The management of the failing companies scarf off most of the cash. So they get a big reward. The workers and stock holders get blown to the wind.”

“BINGO! Justice in action. And what determines how all this happens?”

“Hmmmm … I guess, the free market.”

“Buzzzzz! I’m so sorry Mr. Nanook. That’s the wrong answer. That’s what everyone is told. That’s the party line. That’s part of the brainwashing. The real truth of the matter is that every detail of what happens to both the management and the blown away workers and the stockholders is controlled by U.S. law.”

“Hmmmm . . . I guess that’s so. So, why isn’t the law constructed to make this more fair?”

“Why indeed? Think back to what we talked about. Think back to what I told you about the government contracts, the universities and the lawyers.”

“OK! OK! Our government is corrupt and is constructed to permit and support more corruption. All the laws are set up to protect and reward the upper class, even when they do a very bad job at running things.”

“That’s the gist of it. There’s a book written by Robert Ringer called Winning Through Intimidation. The way he describes this is as follows:”

“Successful men rarely know the reasons for their success, even though they always think they know. They repeat the standard myths as a conditioned-response.”

“And most of these successful men come from wealthy families and go through prestigious universities. The system is set up to protect them.

Now I’m not saying that there are NO laws in place to address any of these problems. Over time, there have been some broad thinking people who have made strides forward. For example, related to the workers, there is something called unemployment insurance and there are government employment agencies. But these are both just token activities to act as smoke screens so the public won’t demanding real protection.”

“Like what for example?”

Unemployment insurance

“For example, there are no laws that force companies to guarantee pension plans. So, if a company is about to go bankrupt, it can raid its pension money to pay off the executives. People who have worked for years with a promise of getting a retirement pension get nothing. Also, the unemployment benefits are nonsense. They don’t begin to cover what people need and they only last 12 weeks.”

“Well, I don’t know much about that stuff, but it seems like 12 weeks would be enough to get a new job.”

“It does? Come on. Think SYSTEM. Look at the parts.”

“OK. OK. I guess my first question would be to ask does 12 weeks always makes sense?”

“Very good.”

“I guess, it would make sense for a simple job in a community that had lots of job openings. But what about small towns? What if a mill or a mine closes up and that’s the only job in town? I’d guess that in a case like that, those people would need a lot more than just a few weeks of minimum wage. In fact, they may need help moving to another town.”

“Now you’re getting it. This is the kind of thinking that Karl Marx and others observed a hundred years ago. But despite popular myths, the U.S. constitution was not written to provide social justice. Sure, the politicians will tell you it was. They’re the foxes guarding the hen house. The Constitution was actually constructed to protect the upper classes from the masses. Freedom for the masses was an afterthought. As you know, the whole Bill of Rights was added to the Constitution later with great protest and tribulation.”

“So, now it sounds like you’re going back to making an argument for socialism.”

“Absolutely not! What I’m telling you, and what we’re discussing right now, is that Capitalism, and especially how Capitalism is practiced in the U.S. is as bogus as Communism is implemented in Russia. It’s a big fraud. The Communists came into power riding on the coat tails of the Communist Manifesto, and then proceeded to implement Communism in a way that would make Karl Marx roll in his grave. The same is going on in this country. Capitalism is being implemented by a corrupt government to protect the wealthy. And the foxes will do everything they can to keep the wool over the eyes of the public. And remember, this is not an organized conspiracy. It’s driven by individual greed.

But more important, even if Capitalism were implemented in a pure form, it wouldn’t work. Let me read you a paragraph from another book. Let’s see . . . where is it . . . . OK. This is from Eric Hoffer’s Passionate State of Mind. Page 44:”

“Society is not conscious or educated about the real rules. Rules are not built into the law from a system standpoint to allow soft failure. We need protection from ruthlessness at the point of failure. Companies are supposed to fail. Management is supposed to accept failure with honor.”

“And that’s the big challenge the world faces. Bankruptcy is part of a process. We aren’t taught that in school. Why? Primarily because the lawyers don’t want others on their turf, especially the public. They don’t want it to be understood and handled in a streamlined fashion. But more importantly, NO ONE has developed the whole Capitalist social model into an equitable and workable form. We have to move away from the current Capitalist model.”

Profit - faults

“The concept of profit is one of the most misunderstood economic parameters in our society. When the average person hears the word ‘profit’, their emotions start to boil and they see red dollar signs. So where does this come from?”

“No clue?”

“Since the fear of profit is a major socialist driver, let’s go back and look at the faults of socialism. Where did we say the drive in humans toward socialism comes from?”

“We were talking about the Welfare State. You said that socialism assumed that, at heart, humans really want to work hard. But, in fact, that’s exactly the opposite of how humans behave. Unless they have some strong force motivating them, like starvation, or greed, humans are essentially lazy.”

“Excellent! That’s a good start. Now lets add another factor: JEALOUSY. When you get to talk to Father Vincent, make sure you ask him about the SEVEN DEADLY SINS, OK? Because humans are lazy, they can’t stand it if they think someone else is getting more than they are or that others are getting something for free. So, to most people, PROFIT is just seen as excess reward and something people get for free. Like a bull seeing a red cape, it drives them wild. What people can’t grasp is that PROFIT is RETURN ON INVESTMENT. Sure, they like to get a high interest rate on their own savings accounts. But it’s NOT OK if someone else gets a return on theirs.”

“Hold on a second. I thought socialists believe that people should be given a minimum level of needs, even if they don’t work for it?”

“Good question. So, WHO are you talking about? Are you talking about the socialist elite leadership or the people who have to live in the system? The statement about ‘giving to each according to their need’ doesn’t come from the true thoughts of the average person. This is elitist talk. And remember, socialism doesn’t work. So, when you look at socialism in practice, you’ll see a lot of people living in poverty. You’ll also see a huge amount of effort making sure that no one is getting one iota more than the next guy.”

“OK. But how does this show up in our society?”

“Maybe the best way to explain the failure of the profit element of Capitalism is to explore the explosion of the NON-PROFIT sector of the economy. Let me start this with an introduction from Ebenstein. . . . OK. Page 55:”


“Another structural change in capitalism has been the relative growth of the not-for-profit sector. Traditional economic analysis and popular thinking still concentrate on the private, profit-seeking sector of the economy while neglecting the importance of government and private nonprofit institutions, which together constitute the not-for-profit sector of the economy. In fact, the not-for-profit sector of the U.S. economy IS GROWING AT A FASTER RATE THAN THE PROFIT-SEEKING SECTOR, and currently comprises ALMOST 45 PERCENT OF THE GROSS NATIONAL PRODUCT of the United States…
The expansion of government, defense (on the federal level) and education, health, and welfare (on all levels of government) have been the main areas of growth. Private nonprofit institutions have also enlarged their activities, mainly in education and health…
As an industrial economy advances, more and more labor goes into the rendering of services rather than into the production of goods. Since the scope of the not-for-profit sector includes services such as education, community services, health services, and social welfare rather than goods, its role in the economy is likely to grow as the shift from goods to services persists…
So far there has been little tampering with the traditional pattern of leaving the production of goods to private enterprise working for profit, and this pattern is likely to continue. Even socialist governments in Scandinavia have concentrated their socialization programs on services (health, pensions, education) rather than on industrial production. As an economically advanced nation progressively increases its wealth, demand grows for public provision of services considered essential, BUT THAT MANY PEOPLE CANNOT AFFORD TO BUY, such as old-age pensions, health insurance, education, urban renewal, or cheap transportation in metropolitan areas…
Increasing wealth also makes it possible for private nonprofit institutions to enlarge their activities. Pension funds of labor unions or endowments of private colleges and universities in the United States run into many billions of dollars, and these vast funds HAVE TO BE PRODUCED FIRST IN THE PROFIT SECTOR of the economy before they can be channeled into the not-for-profit sector.”

“First off, did you expect that the non-profit sector has grown so large?”

“This is all too new to me. So I have no clue. But, even hearing this for the first time, I’m blown away. If you’re worried about socialists invading the U.S., and these numbers are right, then you’ve already lost the war!”

“That’s what I’m talking about. So, why do people let this happen? I’ll tell you why. The biggest argument we hear is related to PROFIT. People think that if a for-profit company did these jobs, that huge amounts of ‘profit’ would be drained off to line the pockets of investors, and therefore, wouldn’t be available to run the company.”

“WELL! Isn’t that true?”

“NO! Man have you been brainwashed. But on the surface PROFIT sounds like free money. So, humans, being ‘Single Sentence Logic’ animals grab right on to it. And the press drives the concept home. But no, it’s not the case. Let’s go back to basics. In a for-profit company, what leads to the expenditure of profits?”

“What? What did you say? Did you say EXPENDITURE of profits?”

“Correct. EXPENDITURE of profits. When a for-profit company creates this pile of cash called profits, what do they do with it?”

“Simple. They pass it out to their workers and executives.”

“WRONG! See what I mean. This is the big LIE that you’ve been indoctrinated with. Profit doesn’t appear in a companies accounting sheets until after salaries are paid.”

“OK. I don’t have a clue.”

“Sure you do. Think back to our discussion about stocks.”

“Oh yeah. I remember. In a sensible stock market, profits are used to pay dividends.”

“Right. And what do investors do to earn dividends?”

“They invest money to start or grow a business.”

“Right. And how often does this happen in a well run business?”

“Oh hang on there. Sneaky words – WELL RUN BUSINESS.”

“Good boy Nanook. Stay alert. We’ll come back to that. So, how often does this investment go on?”

“OK. When the business starts up of course. And then, any time the business needs to grow.”

“WRONG! OK. I’ll give you a break. You’re partly right. During startup, is correct. But during growth is not a certainty. The only time additional money is needed for growth is when the business can’t generate it fast enough through normal operations to grab some market advantage. So, let’s look at the startup money. How much of the total operating revenue of a company do you think is involved with startup?”

“Well, you have to buy buildings and machines, equipment and stuff like that.”

“WRONG! Most of that stuff can be acquired through bank loans because it is tangible property.”

“OK. I’m clueless again.”

“And so are most of the people in this country. The initial capital involved with starting a company is used to pay salaries while operations are getting going. So for a business that is going to be in operation for many years, the amount of money that is related to the startup investment is small. So, if the investment is small, what do you think this means about the dividends?”

“OK. I can see where this is going. The dividend requirements are also small.”

“BINGO! I’m telling you, this is all a big SCAM on the public.”

“But what about all those big salaries I keep reading about?”

“That’s another big LIE. That is, for you to be reacting to high corporate salaries in for-profit companies, you have to have an assumption that the salaries in non-profit companies are low.”

“Hmmmm…. Sure, I guess.”

“And that’s the big LIE. Non-profits can stuff a huge amount of money into salaries, bonuses, buildings, perks etc. just like for-profits do. The only thing they can’t do is pay dividends to stock holder.”

“Well, at least they save on that.”

“WRONG! Come on Nanook. Think! Think!”

“Yeah, yeah. Think! Think! I know. SYSTEMS. SYSTEMS.”

“Right. Systems. Think about . . . .”

“Hang on. Give me a chance. This whole issue is probably going to come back to a question of VALUE.”

“There you go.”

“And it doesn’t take me long to see a hundred ways a non-profit can screw things up if they aren’t subject to the kinds of checks and balances that the market would exert on for-profit companies.”


“Bingo is right. In fact, I can see the catastrophe starting to unfold already. These non-profits get special privileges from the government, like tax breaks, research grants, year end bailouts, special contracts. And if the non-profit is a government operation itself, then we know the inefficiency and lack of creativity will swamp out any benefit that not having to pay dividends would incur.”

“Correct. And think about the following. Remember when I was reading Ebenstein I emphasized some things. The first was, ‘demand grows for public provision of services considered essential, BUT THAT MANY PEOPLE CANNOT AFFORD TO BUY, such as old-age pensions, health insurance, education, urban renewal, or cheap transportation in metropolitan areas.’ So, tell me, how is saving a few bucks on dividends going to generate the huge amounts of cash needed to pay for pensions, health insurance, education, urban renewal or metropolitan transport?”

“Funny. What a joke. How could I not see this. How can people be so stupid.”

“That’s the point. It has nothing to do with profit. It’s a big SCAM by the government elite to control what goes on in society. They populate the Boards of Trustees, they head up the agencies that funnel huge amounts of tax money around, so that they, personally, can rake off their personal PROFIT. And the public get’s soaked with the bill, in the form of taxes and incompetent operations that are NO LONGER DIRECTLY SUBJECT TO MARKET PRESSURES.”

“WOW! I see where you’re going. It’s the CENTRALIZATION failure of socialism again.”

“BINGO! And the other big LIE about all of this is that it can’t be handled by private industry. With the exception of the military, it can ALL be handled by private industry with huge gains in performance. It’s a big socialist SCAM.

Now, let’s look at the second thing I emphasized: ‘Increasing wealth also makes it possible for private nonprofit institutions to enlarge their activities. Pension funds of labor unions or endowments of private colleges and universities in the United States run into many billions of dollars, and these vast funds HAVE TO BE PRODUCED FIRST IN THE FOR PROFIT SECTOR of the economy before they can be channeled into the not-for-profit sector.’ Do you understand this point?”

“Actually, no.”

“What it says is, in order for wealthy individuals to contribute donations to their colleges or favorite charities, they first have to somehow earn the money. So, how can they do that?”

“Well, in order to accumulate large amounts of money, they have to luck out with some big investments. That means stocks, which means for-profit companies.”

“BINGO! So think about the SCAM going on in all of this. There is a group of people in this country who are the elite business people. They not only control the big businesses, but they also control the government. To make big money, they created the SECONDARY STOCK MARKET. That, as we discussed, takes money from the poor and gives it to the rich. The same people who set up the stock market also control taxes. So they create big tax breaks for something called PHILANTHROPY, supposedly to entice people who have made big bucks in the stock market to make donations to NON-PROFIT institutions. But these non-profits are also being run by the same elite, who sit on the Boards of Trustees. A lot of that money just comes back around into their pockets to feather their personal nests. And they get to steer the work of the non-profits to projects that support their businesses. Of course, they use politically acceptable words that stir up the caring emotions of the masses. It’s just a smoke screen to keep the masses from revolting.”

“BUT? If the masses are happy, haven’t we achieved something?”

“OH Nanook. You’ve been so brainwashed. Think about what you just said. There used to be slaves in this country. And sometime, the slaves actually did things like sing and dance. So, you might say, in a way, they were, quote, ‘happy’. Was that satisfactory?”

“Of course not. But are you saying we’ve replaced one form of slavery with another?”

Social imbalance summary

“I’ll let you be the judge of that. Think SYSTEM. Think about the 60% of the stock that is owned by 0.1 percent of the citizens and professional investment companies; about the 50% of the workforce that is employed by just 3.5% of the companies; the 27.3% of the workforce that is employed by just 0.02% of the companies; and the 45% of the Gross National Product that goes through institutions that are not subject to direct market pressure. Then ask yourself, is the Capitalist PROFIT element alive in the U.S.? Do people really have free decisions about where they work and what happens to their money?”

“OK. I’m speechless.”

Stable Prices - faults

“Well, you should be.. Let’s move on. Last but not least, the element of Stable Prices.

Now, remember, by stable prices, I’m not talking about every price staying the same. I’m not talking about price controls. I’m talking about the overall level of prices: that thing we call INFLATION. Let’s start out with something from Ebenstein again.”

“Prices are a product of the amount of money in an economy and the amount of goods and services. . . During periods of price stability, the rise or decline of a price indicates that more or less of that good should be produced. If the amount of money increases at a faster rate than the amount of goods and services, then inflation will result. . . inflation has serious long-term negative repercussions for a nation's economy. Inflation rewards those who have borrowed because the real (as opposed to nominal) value of what they must repay declines. Conversely, inflation punishes savers because the real value of what they have saved declines. In short, inflation discourages thrift and encourages consumption. . . . When inflation robs the value of money, this is as much a loss to someone as if his or her money were stolen. Moreover, since MONETARY POLICY IS DETERMINED BY GOVERNMENT, this loss via inflation is in some sense government-sanctioned.”

“The key words here are: MONETARY POLICY IS DETERMINED BY GOVERNMENT. The government prints money and controls the prime lending rate. The Consumer Price Index, which is one measure of inflation, has varied in the past between -10% and +17%. Values between 2% and 4% are considered IDEAL. The question is why? Why doesn’t the government set this to 0.0%. Why don’ t we hold overall prices constant?”

“I remember reading something about that. I think it was that there is a connection between the rate of unemployment and the inflation rate.”

“That’s correct. Now remember, government can set inflation to anything they want by adjusting the money supply. So there are some special interests pushing the rates to where they are. Think about it. One of the big issues is labor – that is, large companies. In dealing with the unions, it’s pretty hard to negotiate a pay reduction. So, keeping inflation positive helps industry stay ahead of the unions by agreeing to increases that quickly get diluted by inflation. The government carries a lot of debt. The debt is covered by the sale of bonds. When the government pays off a bond, like $100 for example, after inflation raises all other prices, the $100 repayment appears to be worth less. With a substantial inflation rate, people are tempted to put their savings in the stock market because stocks ‘claim’ to do better than banks. And, as prices, including payroll, move up, people get pushed into higher and higher tax brackets. This further increase taxes without the government admitting it.”

“So, the real issue here is not that payroll will grow to match rising cost and keep everything in balance. The real issue is that some special interests are favored over others. And overall, the public, again, pays the price for this.”

“Correct. So, now, let’s try to summarize the key issues.”

**Capitalism vs. Socialism – liberals vs. conservatives

Liberals vs. conservatives

“Ebenstein opens his book with some general statements. Page xi in the preface:”

“The major conflict of our age is the struggle between aggressive totalitarianism and the free way of life. Not long ago the chief threat to liberty was fascism; today it is communism.”

“Jumping to page 62:”

“To reduce disparities in wealth and opportunity is a positive goal. In an unregulated capitalist economy, successful entrepreneurs reap rich rewards while many other individuals earn only a modest income, and some face periodic unemployment and poverty. These market-based inequalities have been a major source of controversy in modern politics.
Socialists condemn economic inequality as arising from the ill-gotten profits appropriated by owners and managers of capital through exploiting the workers by denying them fair wages.
Liberals, too, challenge the extremes of wealth in a market economy, not because economic inequality is unjust in principle but because every citizen is entitled to freedom from want as a democratic right.
Conservatives, on the other hand, are more inclined to defend economic inequality as morally justified by the differential contributions particular individuals make to economic growth. Thus, conservatives believe that, because entrepreneurs drive the engine of economic progress that benefits everyone, they are entitled to exceptional rewards that the rest of society cannot claim.”


“Sure. These guys are just in a pissing contest. They are each defending their side just to be winners. They don’t have any intention of figuring out the true issues. And I’m purposely not using the phrase, ‘find a middle ground’. I think, if I’m learning anything about thinking from a SYSTEM or CREATIVE viewpoint, it’s that ‘middle ground’ is a euphemism for people in denial to save face who won’t put out the effort to really find fundamental truth. It’s also probably all an average thinker can imagine.”

“Whoa! Were did that come from? The apparition of Daniel Webster appears before us in the guise of the mild mannered reporter, Nanook of the North.”

“I’m not done. Hold the accolades!

The statement about the socialists is an obvious smoke screen for jealousy. The socialist elite are in denial about their jealousy and personal desire to also be wealthy. This shows through because of the focus of this statement on money. What the statement ignores is a more important issue. The socialists are overlooking the complexity of any solution needed to sustain worker motivation while creating equity that all would view as fair.

The liberal statement is just as bogus. It is way over simplistic to say that any country can guarantee ‘freedom from want’ as a right without a dozen qualifications.

And this conservative nonsense is off the wall. Sure, you can make an argument for economic inequality based on different contributions of skills and effort. But that doesn’t support, what did you say before, a 531 to 1 reward for a lucky business break. And the statement relies on a major assumption: that workers are free to choose what they do. This view is academic at best. If workers have willingly accepted the jobs they are in, but aren’t happy with them, then practical alternatives must NOT be available.”

“Hurray! Hurray! Nanook for President. Take the boot out of your mouth, put them on your feet and get running for office.”

We both started laughing.

“Actually, I think you’re right on with your points. Let me read a little more, and see if you can stay on a roll. Page 65:”

“Extensions of the welfare state depend on the desire of liberals to expand the scope of public functions to encompass activities formerly left either to individuals personally or to voluntary joint efforts. Liberals justify collectivizing an activity or service on the grounds that without government involvement, the activity will be performed inadequately or neglected entirely. Saving for retirement, for example, may be left to each individual as a purely private responsibility; but many people are unable to save because their income is low, while others will choose to spend all they earn on current consumption instead of saving for the future. The result will be that for one reason or another, a sizable proportion of elderly persons will find themselves destitute. Such widespread poverty - which did in fact exist before the welfare state - prompted liberals to demand a compulsory system of Social Security financed by taxes on both employees and their employers, in order to assure a minimum retirement income for everyone. Saving for retirement was transformed from a voluntary activity subject to the uncertainties of personal circumstance and choice to a collectivized activity mandated by law as a universal requirement.”

“The problem is, this description produces the same problems you described. Collectivizing is NOT the only alternative to private responsibility. And collectivizing by a government agency is surely never going to achieve ‘adequate’ and non ‘neglected’ results. It is also just as simplistic to think that the job can just be handed to a bunch of financial firms given the corrupt laws we have. A much more thought out program is needed. Continuing:”

“For similar reasons, liberals have advocated public welfare for the poor, not simply private charity; legal enforcement of pollution standards, not simply voluntary compliance; government grants for scientific research, not simply private investment; public subsidies for the arts, not simply private contributions; and affirmative action guidelines for women and minorities, not simply voluntary nondiscrimination. In these and other instances, liberals have urged collectivization of a voluntary activity to assure that results they value will actually be achieved.”

“These ideas have the same fault. As you said, the need for ‘liberals’ to distinguish themselves from the others, has blinded them from looking for fundamentally workable solutions, especially where these solutions would incorporate some of the suggestions of the other ‘isms’.

Now consider some more conservative views:”

“Perhaps no issue is more fundamental in the neoconservative critique of welfare liberalism than their insistence on privatizing activities that have been collectivized under the welfare state. As a general principle, neoconservatives see harmful effects from extending the scope of public functions. One main harm is a loss among the beneficiaries of public services of a feeling of self-reliance and a sense of personal responsibility. Neoconservatives believe, for example, that public welfare programs intended to aid the poor actually perpetuate their poverty by removing incentives to self-help: Instead of accepting personal responsibility for their situation and acting to improve it, welfare recipients become dependent on government aid and lose the motivation to work for a better life on their own.”

“I think this point tries to be way too politically correct. Ebenstein talks about the ‘loss . . . of a FEELING of self-reliance and sense of personal responsibility.’ Let’s call a spade a spade. The welfare programs, in typical socialist denial, ignore the fact that humans are just lazy. Humans don’t want to be self-reliant; they don’t want personal responsibility. They want a free handout. But that’s not even the most important point. Any related program should NOT be a government agency. Sure, the government can write the rules. But the implementation should be through private, FOR-PROFIT industry. Page 67:”

“Collectivization drives out voluntarism as the primary source of funding. The result is not only a loss of personal freedom in deciding how one’s income should be spent but also a decline in habits of public generosity and a sense of community spirit. Only by returning collectivized activities to private voluntary action can these unfortunate effects be reversed.”

“Now here we have corrupt conservative bull shit of the highest order. Do you see it?”

“Not exactly. I think I do see, from what you’ve told me, that thinking human nature will voluntarily step forward to solve these problems is unrealistic. In fact, if human nature was working, the liberals wouldn’t have had anything to complain about. Is that it?”

“Exactly. But the additional point I was driving at was the hypocrisy of these conservative guys. They put up this big smoke screen with all these erudite statements about going back to ‘community spirit’ and ‘public generosity’. These things weren’t there to begin with. But what’s their real agenda? They’re Misers to the end! They just don’t want to pay for it. They don’t want it coming out of their pockets. They could care less if people starve or die. So, let me keep reading and see if they expose themselves:”

“In urging privatization of public functions, conservatives reaffirm the primacy of nongovernmental institutions in developing qualities of initiative, responsibility, public spirit, and other important virtues. FAMILIES, CHURCHES, SCHOOLS, PRIVATE ENTERPRISES, and CULTURAL INSTITUTIONS should be protected from government intervention, because it is in these private environments that the personal qualities needed to sustain a free society are nurtured and transmitted.”

“OK. There’s the smoking gun. All of these institutions had a chance to work based on their own initiative. They failed. The government had to intervene to ward off catastrophes. But once again, the conservatives try to wrap themselves in the Flag of the great United States of America, without a clue about how any of this really works. MAGICAL THINKING! A key sign of mental illness. Why didn’t they include Santa Claus and the Easter Bunny on the list.”

“Hey Ben! You forgot to call them the modern white slavers. You know, just to keep your blood pressure rising.”

“BINGO! I’m going mad! Time to go rolling naked in the snow to cool off. Nanook. You can ride shotgun with me anytime. Let’s take a few of those boots out of your throat and get some real Navy coffee in there.”

“So, where are you going with this point?”

“I’m trying to drive home the point that the conservatives are as unrealistic as the liberals. What is going on here is that, in their drive to get elected, they focus on polarizing the issues, simplifying the issues, and driving voters to make decisions based on just a FEW key issues. Their goal is to CREATE single issue voters. They are playing on the principle of SINGLE SENTENCE LOGIC. They are NOT providing realistic solutions for the issues. And our society, which just keeps kicking the ball from one side of the political court to the other, is getting the short end of the stick. We’ve got to move to a different game. Here, let’s finish up with one more point about the conservatives. Page 76:”

“A final important strand of conservative thought, related to its general distrust of government, is its belief that a stable society must have at its core a system of moral and cultural values that result in responsible citizens capable of implementing democracy. Unless the citizenry is responsible, moral, and prudent, neither economic prosperity nor democracy is possible. . .
The conservative movement has, thus, tended to support traditional institutions in society such as family, church, and neighborhood schools. The conservative view is that recent governmental policies have eroded these and other pillars on which society is constructed. In this outlook, the conservatives have adopted a broader vantage point than some of their liberal critics - that is, the conservatives view is that society is more than government; political policies, while vital, are not the whole of a society's way of life. Unless certain cultural traits are present in a population, free government is not possible.”

“So, what do you make of this?”

“Yeah. I agree. Totally idealistic and unrealistic. I think they are just trying to capture all the good words and claim them for themselves. But I do agree that the need for good morals and cultural values in society makes sense.”

“Yeah. But what about where they say these are going to come from? There are some pretty big holes in their assumptions. Family, church and neighborhood schools are not going to produce the ideal traits. How are families going to figure out basic principles of morals and values if the greatest philosophers in history haven’t been able to do it. The schools have no mechanism for establishing values. In fact, they are not allowed to preach values. So, this leaves us with the term ‘church’. What do you think about that?”

“Well, I guess I’d agree. If anything, I’d expect the Church to be the teacher of values. But, I’m also getting to know you well enough that I’d better not just say that without covering my mouth so you can’t stuff more boots in there. And, I’m not sure why you used the word ‘term’ in the phrase ‘leaves us with the TERM ‘church’ “

“You’re catching on. You’re catching on. You really have to open your mind. You’ve been so brainwashed. So, let’s start from your premise: the church should be the teacher of values. WHAT CHURCH?”

“I kinda thought you were going to ask that.”

“The conservatives are hiding their real motives. These guys are lying hypocrites! They’re just a bunch of ‘closet Christians’. They want us to believe they will keep their religion separate from their political actions, but it’s all bullshit! What they are really trying to do is use the force of law to force people to follow Christian social values. But they are totally disconnected from reality. They’ve been so totally brainwashed that they don’t even have a clue what the whole issue of religion in society is about. They are so blind, they don’t even understand that whenever they fly a Christian banner, there is not a single message. There are over a thousand different Christian sects in this country. And they don’t even begin to agree with each other. Sure, they spout the key buzz words: Jesus, gospels, redemption etc. They walk down the same street claiming ‘Christian unity’. But as soon as they are forced to choose and follow rules, off come the gloves and the melee starts. If you expand that issue to the world stage, not only do the gloves come off, but the sabers come out and lots of blood starts to flow. You should really talk about this with Father Vincent. He really understands it.

So, under the microscope, most sections of the conservative agenda fall apart.”

“Yeh! Well under the microscope, I’m totally falling apart. We’ve ruled out socialism. We’ve ruled out capitalism. We’ve ruled out liberals. We’ve ruled out conservatives. The family is in shambles. The schools are in shambles. The churches are in shambles. What’s left? I’m afraid to say it: all that’s left is the BOY SCOUT LAW!”

I thought Ben was going to go into hysterics! He was laughing so hard he had tears in his eyes.

“Funny! So funny! Actually, the Boy Scout Law is a lot more sound than you’d first expect. But, before we write off the entire history of social philosophy, there are a few more sacred cows that we still need to skewer. We haven’t yet talked about the big ‘D’: DEMOCRACY! So, 25 words or less, go for it!”


“Yeh, RIGHT! First, I’m going to look around for boots! OK. The greatest value of America is that we live in a democracy. And, to me, that means the people make the decisions. WE THE PEOPLE, and all that. . . . Yeh, WE THE PEOPLE . . . OK. Let’s make this easy. I’ll open my mouth wide . . . just have a heart and pick some boots without much gravel on them, OK?”

“You’re Ok Nanook. Let’s just skim over this quickly right now. It’s a very deep subject and most people in our country don’t have a clue what’s going on. Let me quote from a book by Bertrand Russell: Beyond Good and Evil. Let’s see. I’ve got a bookmark here . . . “

“Apart from war, the modern great State is harmful from its vastness and the resulting sense of individual helplessness… Even in a democracy, all questions except a very few are decided by a small number of officials and eminent men; and even the few questions which are left to the popular vote are decided by a diffused mass-psychology, not by individual initiative.”

“OK. I understand that. But we still get to vote. We can still talk to our representatives.”

“Nanook! It’s all a MYTH! It’s a BIG LIE. Sure, we get to vote. The Russians also get to vote. They just only get one candidate. Sure we can talk to our representatives. The Russians can also talk to their representatives. So what. They are just giving you lip service. They don’t listen. Their positions are determined by people who have the influence to get them re-elected. What’s important here is for us to understand EXACTLY what a citizen’s goals are. So, think about what you just said. Is voting your goal? Is talking to a representative your goal? Be precise.”

“Yeah. I see. Voting is just a means to an end. Talking to a representative is also just a means to an end. The end is getting the world to go in a direction each of us wants it to go in.”

Tyranny of the majority

“BINGO! The myth is that democracy somehow allows each of us, ‘WE’, the people, to individually get to determine what goes on in our lives. It’s a lie because we have each been brainwashed to believe that what we say makes a difference. It doesn’t. It’s a BIG LIE. Even in elections, the popular vote does not count. The popular vote, either for a person, or a referendum on almost every subject, is just a pole that is used by the legislators. They keep the ability to decide the winner or the issue to themselves. This is not a current problem either. Let me show you how long we’ve known about this. Let’s go back to another old sage, John Stuart Mill, and his book: On Liberty, which was written a century ago in 1859. Page 5:”

“It was now perceived that such phrases as ‘self-government’ and ‘the power of the people over themselves’ do not express the true state of the case. The ‘people’ who exercise the power are not always the same people over whom it is exercised; and the ‘self-government’ spoken of is not the government of each by himself, but of each by all the rest… ‘THE TYRANNY OF THE MAJORITY’ is now generally included among the evils against which society must be on guard.. chiefly as operating through the acts of the public authorities.’

lynch mob democracy

“Do you understand what he is saying? He is saying that DEMOCRACY FAILS EVERYONE who is NOT IN THE MAJORITY! If 51% of the people, even in a theoretically perfect democracy, decide to kill off the other 49%, then democracy has failed the 49%. This is called ‘lynch mob democracy’. But in the REAL WORLD, democracy is not even close to that. The bills in congress, which create laws that all of us have to follow, do not even get close to a 51% vs. 49% vote. Why? Because the people get left out. There are only 100 senators. If 51 of them vote for something that ALL the people in the country hate, then they win by a 51 to 230 million vote. It’s more like .00005% vs. 99.99995% where the 99.99995% citizen votes don’t have any influence at all. This is how bills in congress work.

The people controlling the government will keep telling you that you have a voice. This keeps you sedated and out of their way. They will keep telling you that they are ‘public servants’, while, in fact, they are totally their own servants and servants of the rich and powerful. The important point is, a majority vote democracy, even in a theoretically perfect situation, is NOT an adequate model. DEMOCRACY should NOT be the goal. The goal should be FREEDOM. The goal for a society must be LIBERTY.

Socialism and democracy

But, ironically, there’s another factor related to democracy that I want to point out. Democracy is also VERY closely tied to socialism. Let me read again from Ebenstein. Page 15:”

“The link between democracy and socialism is the most important single element in socialist thought and policy. The history of socialism quickly shows that successful socialist movements have grown up only in nations with strong democratic traditions.
The reason for this parallelism is simple. Where democratic, constitutional government is generally accepted, socialists can concentrate on extensive economic and social reforms: to create more opportunity for the underprivileged classes; to end inequality based on birth rather than service; to open the horizons of education to all people; to eliminate discriminatory practices based on sex, religion, race, or social class; to regulate and reorganize the economy for the benefit of the entire community; to maintain full employment; to provide adequate social security for the sick, unemployed, and aged; to re-plan the layout of towns and cities; to tear down slums and build new houses; to provide medical facilities for everybody, regardless of income; and finally, to rebuild society on the foundation of cooperation.
All these goals of democratic socialism have one thing in common: to make democracy more real by broadening the application of democratic principles from the political to the nonpolitical areas of society.
Freedom of worship and freedom of political association, historically the first liberties to be won, are still the essential foundations of democracy.”

“OK. Let me take a stab at summarizing this. Socialism has a strong link with democracy. This is primarily so because democracy is a process people believe will take power away from the rulers. And socialism focuses on fixing problems that those same people find themselves in the middle of. As you said earlier, socialism’s two main goals are: social equality and the abolition of poverty. You have nothing against all these social reforms. However, the problem is, democracy, as a principle, is severely flawed. Socialism, as a principle, is also severely flawed. And the way democracy and socialism are implemented totally miss the goals that each philosophy actually sets out to achieve. Am I right?”



“And since I just saw Bill drive up, you can now spit out all those boots I stuffed down your throat and head back to base and get some real chow.”

“Ben. I really, really liked everything you told me. My head is just a blur. So many of the things you said are so opposite anything I know. So, I’m going to have to think about all of this a lot. But please, I do want to hear more. If there is a belief I have, above anything else, it’s TRUTH. Truth founded on reality. I’m just finding that these are not very easy to come by.”

“You’re a great guy to talk with as well. Hey Bill. How’d it go?”

Nanook (italics) is talking with Ben from Escape to Insanity, Ch. 21

**Failures of democracy (Major breakdown between model and reality)

Intro – two faults: model vs. reality; nature of man

OK. Let’s dig into the soul of DEMOCRACY itself. People have all kinds of wild notions about what democracy is, as if it was some kind of sacred thing. It’s not. The basic concept is full of faults. Let me start this off by reading from The Consent of the Governed. Page 2.”

“The current crisis in democratic societies is rooted in two developments.
First, there are striking gaps between model and reality… the idea of a public interest... a common welfare, which it is the function of our political system to seek out and implement… [while] actual politics are... a struggle for power… dominated by special interest groups…
Second… [the] assumption about the nature of man and society on which our inherited ideas of democracy rest, have been widely challenged or repudiated… The eighteenth-century view saw man as a rational, infinitely improvable political animal who could be trusted to govern himself… psychology as a scientific discipline has led to account the dominant role of irrationality and selfishness in human behavior.”

**Faults between model and reality ( failure of implementation)

Intro to failure of implementation

“OK. So let’s look at these two failure categories separately. The first is essentially a failure of IMPLEMENTATION. The philosophers outline what democracy is supposed to be; the politicians screw it up. Any problem understanding that?”

"Not any more. The leaders of the world, marching with an authoritarian banner, continue to reinvent slavery in multiple disguises. They raise the Seven Deadly Sins to a fine art to match their current culture. The people of the world, dancing to the Seven Deadly Sins, are sucked into the political trance, electing leaders for their charisma instead of their competence. "

“WELL! You are getting the hang of this. I’m impressed! Here is Livingston’s version: ‘…[one] group of critics holds that our difficulties lie not in the traditional dogma but in their corruption… ‘

Democracy defined

So. Let’s do this by the book.”

“Democracy: from the Greek demokratia, rule by the people; from demos, people, and kratos, power.
a. Government by the people; especially, rule of the majority.
b. a government in which the supreme power is vested in the people and exercised by them directly or indirectly through a system of representation usually involving periodically held free elections.”

“And since democracy always gets mixed up with a republic, let’s define that as well.”

“Republic: from the Latin respublica, a thing of the public;
a. a government having a chief of state who is not a monarch and who in modern times is usually a president;
b. a government in which supreme power resides in a body of citizens entitled to vote and is exercised by elected officers and representatives responsible to them and governing according to law.”

“So, right from square one, the western world does NOT implement democracy. What they do is set up REPUBLICS! That is, the U.S. is technically NOT a democracy. It is a republic. And that means, the power to rule resides with an elected body of representatives, not with the people.”

"OK. I’ve heard this. But it never really grabbed me the way I see it now. This is a HUGE problem.”

“Bingo! Not only don’t the people make direct decisions, they don’t even directly elect their leaders. The founders couldn’t take that chance. Instead, the public second handedly elects delegates and representatives. The representatives then nominate the candidates and choose the winner from that group. The point is, it is the representatives who choose, not the people. And, as we know, in the process, the media and special interests frame the important issues and structure how they will be discussed. The special interests structure and write the proposed laws.”

"I guess that’s right. The public has very little to say about the actual wording of any law.”

“And this was ALREADY KNOWN right from the beginning. Jefferson knew that the key issue was power. He also understood that if you didn’t clearly isolate power, it couldn’t be watched and people couldn’t be held responsible. Let me read about that."

“A second principle of majoritarianism requires that the location of political power be clear and recognized… By 1796, Jefferson himself saw that responsible majoritarianism required the organization of political power through political parties… It had become obvious that the alternative to the organization of responsibility was unorganized irresponsibility.”

“This is all fine and good for the game of politics. But what’s the implication for democracy?”

Democracy is dead

"Yeah. Good question. Once we see that the power in the country really lies with congress, it’s clear all we’ve done is reproduce the aristocracy of England and France all over again.”

“Bingo! Your ‘government by the people, for the people’ is just a big LIE! Are you getting to see that?”

"Sure. I guess so.”

“NO! Guessing is not enough. Listen to yourself talk when the words come out of your mouth. Are you ready to admit that, in the western world, DEMOCRACY IS A BIG LIE!”

"Ugh??? Well??? Not compared to Russians.”

“UNBELIEVABLE! Spoken like a true politician. Right into the denial quicksand.”

"OK! OK! Democracy is a sham! Is that what you want me to say? Come on Ben. This is pretty hard for me to handle.”

“But don’t you see why it’s absolutely critical that you face up to this? If you don’t bite the bullet and face it, you’ll never be able to see through the fog. So! Admit it. DEMOCRACY IS DEAD! Long live democracy!

And, where does that leave us?”

"Stuck in a wooden shack a thousand miles from nowhere.”

“Come on seal mucher! So you’re whole world has fallen apart. That doesn’t mean you can quit! You still have to keep truckin, man. You still have SOME kind of world to deal with. The question is, what does THAT world look like? And, more important, how much ‘democratic’ culture has our ‘republic’ given us through our Constitution and political parties?”


“So. Let’s keep going. We already have a solid model to work with. It’s a REPUBLIC. And with that, I’ll buy you another cup of coffee.”

"Yeah. I can go for that. The cup you just got me is still full. And it’s cold.”

Search for democracy in the current republic structure

Ben grabbed my cup and headed to the never ending coffee pot. He didn’t stop five seconds to take a breath.

Selection of leaders

“So, how do you think the current system does picking leaders that respect democracy?”

"Not very well. Father V and George talked to me about that some. The way we conduct elections, winning is based on personality and the manipulation of emotional issues using Single Sentence Logic to drive people through fear to support the issues lined up by the parties.”

“Very good! And what kind of leadership skills do those elected leaders have?”

"Well, for driving the sheep where they want them to do, their masters of their trade. But for understanding how to achieve a thriving society, pretty much nil.”

Faulty leadership structure - need multiple roles

"Not a very good start, is it? So, right from the first problem, leadership, we are in quicksand. We are told that the goal of a democratic government is to secure our common welfare. The ideal model for that starts with the assumption that those who rise to power will hold the public interest foremost, which they swear an oath to do when they go into office. But, somehow, that doesn’t seem to happen. Let me read what Livingston says about that in Consent of the Governed. Page 10.”

“Motivations to politics are: desire for fame, prestige, power, fortune, group representation, ideology, philosophy to social justice. The techniques of politics are: force, threats of force, bribery, duplicity, manipulation, martyrdom, reasoned arguments, appeal to authority, appeal to shared values.”

"Does this sound like a person who is concerned with the public interest?”

"Sounds like an A2, A3 problem?”

"Bingo! The way we have the structure of politics set up, it almost totally precludes selecting people for leadership who can even conceive what the public interest is. Let’s recreate these lists from a public interest viewpoint. Motivations to politics: desire to see society do well, pride of successful accomplishments of citizens, ability to facilitate well, modest reward, empowerment of others, ability to help find wisdom, philosophy leading to social efficiency. The techniques of politics: development of egalitarian principles, teaching principles, open participation, unity of wisdom, development of mutual reliance and cooperation, sharing success, reasoned wisdom, appeal to principle, appeal to individual creativity. So, how’d I do?”

"Complete FAILURE! Not one thing in common.”

"Bingo! So, how can we expect democracy to actually work if the fundamentals upon which politics work are one hundred eighty degrees out of sync from what democracy depends on? And the tragedy of this little example is that EVERY level of government is filled based on the motives Livingston listed. This is not just about the position of President. Let me read another comment about this from Bertrand Russell’s book Beyond Good and Evil.”

“Men who have the habit of authority are peculiarly unfit for friendly negotiations; but the official relations of States are mainly in the hands of men with a great deal of authority in their own country.”

“Do you see the ironic twist here? It’s a version of the asymmetry philosophy. We’d like our society to be led by people who are good at FRIENDLY negotiations. BUT, once a bad apple appears anywhere on the global scene, that is, a tough leader, then the best people to negotiate with that tough leader are other tough leaders. So the environment of negotiations needs to be considered before the people doing the negotiations are selected. But we also have to find a way to route out the toughness as soon as the tough situations are over.”

"But I think we can generalize this observation to almost every situation. That is, the person we select for a specific position should be a GOOD FIT for that position.”

“Yeah, sure. And how many times have you seen a job ad that said, ‘Wanted. Leader with demonstrated cooperative team building skills. Those with heavy handed methods need not apply.’ Or how about, ‘Wanted. Leader capable of developing new social principles. Small and narrow minded individuals should not apply.”

"OK. So, our national organizational skills still need some improvement.”

“Bingo! INCOMPETENT! And that’s the way the leaders want it! The goal is power. The goal is prestige.”

"Hmmm… And George explained that for those kind of people, most of whom are driven by Narcissistic drives, the more they push down the abilities of the average person, the more confidence they feel.”

“Nanook! You’re amazing! Hang in there man. You’re doing great.

Faulty choice of the principle of majoritarianism

Basic description of majoritarianism

So, we’ve quickly put our first nail in the coffin of democratic culture by admitting that our culture doesn’t have a clue about electing democratically concerned leaders. So, maybe we can fall back on another major assumption. That is, the leader isn’t actually the one who makes the decisions. In a democracy, the decisions are made by a large GROUP of people. Right?”

"Ugh...sure. Why do I feel like I’m up to my neck in quicksand.”

"Because you’re a lemming tracker par excellence, who can smell quicksand a mile away. And unbeknownst to you, you’re already out of the pan and into the fire. And what kind of observations can we make about these GROUPS?”

"OK! OK! I’m in the fire. These groups are elected the same way. Their the same kind of people. Only, they’re NOVICES, who will do anything to climb the ladder.”

“Bingo! I’m sure you know the old adage that democracy is the assumption that more than 50% of the people will be right more than 50% of the time. Well, there’s a better quote in a book called Zen and the Art…”

"Yeah. Yeah. ‘When one person suffers from a delusion, it is called insanity. When many people suffer from a delusion it is called Religion.’ You guys all read the same books!”

“You’re funny. But what does this say about the 50 / 50 rule?”

"We’re doomed!”

“You don’t have a clue how bad this really is. Did you ever hear the term MAJORITARIANISM?”


"Majoritarianism is an academic word for VOTING! It essentially means people come together by some process to vote on an issue.”

"Sure. Majority rules.”

"Bingo! That’s exactly what your brainwashing was supposed to get you to say. But you have NO CLUE what the competitive A2 mind can do with something this simple. Let’s look at that.

First off, does ‘majority rule’ always mean 50% plus one?”

"Hmmm… No. It could be a two thirds vote.”

"Anything else?”

"Hmmm… “

"OK. No more questions. You have a LOT to learn about this. There are as many ways to mickey with this as there are politicians. It can be any percentage over 50%. So, numbers like 60%, 2/3rds, and 75% are common.

The second part is knowing what the percentage applies to? It can be all of a population. It can be just those who show up to vote. It can be a QUORUM, determined by some bylaws.

A third element is breaking the vote into steps. For example, in many countries, where there are a lot of political parties and a lot of candidates, they often have a preliminary vote of the people. A number of candidates, like two, three or four, with the highest number of votes, get to have a run off.”

"Hmmm… But actually, we do that too. We just call it a Primary and only let people registered with the political parties participate.”

"Right. But, look at what this means. With all of these shenanigans, the final outcome is influenced by fewer and fewer people. The winner of a Primary election is not determined by the people of that party, but by the DELEGATES selected from the states. Do you know that there is no provision describing political parties in the Constitution? Before 1820, the Democratic and Republican members of Congress would nominate a single candidate from their party to run for President? The process blew up in 1824 and switched to national conventions in 1832. So, think back to our earlier discussion about this. Sure, we point to the Russians and ridicule them for saying they vote, but then only have one candidate to vote for. But, what about us? Sure, we have more candidates. But they are picked by just a few influential people. It’s very far from a selection by the people. Let me read that quote again from Bertrand Russell.”

“Apart from war, the modern great State is harmful from its vastness and the resulting sense of individual helplessness… Even in a democracy, all questions except a very few are decided by a small number of officials and eminent men; and even the few questions which are left to the popular vote are decided by a diffused mass-psychology, not by individual initiative.”

Tyranny of the majority

“But even all of this manipulation is not the real tragedy of majoritarianism. It’s the concept of VOTING itself that’s the problem. Sure, everyone thinks it’s the only way to get input from the people. But they’re blind. Think back to what I said about a LYNCH MOB.”

"Right. We talked about that. A lynch mob is a democracy. If a vote is taken for some issue and the result is 51% to 49%, then the people who made up the 49% had their freedom taken away from them; the TYRANNY OF THE MAJORITY you called it.”

Tyranny of representation

“Bingo! But that’s not even close to the whole story. If 51% of the members of Congress choose something, this is only 275 people. That means something like 99.9999% of the people in the country don’t have a vote. So the fundamental right of democratic participation that people believe they have, is actually miles from reality. It’s a BIG LIE. The aristocracy of the rich has been brought back and lies are told to keep the ‘masses’ in their place. As I said before, the important point is, a majority-vote democracy, even in a theoretically perfect implementation, is NOT an adequate model. A majority-vote democracy should NOT be the goal. The goal should be FREEDOM. The goal for society should be individual LIBERTY.”

“But if this is such a failure, what else can we do? I can’t even imagine another alternative.”

“Why am I not surprised! Education is not set up to teach you broad knowledge or to teach you CRITICAL THINKING. The fact is, there are a lot of ways to do this that come much closer to freedom and don’t automatically create chaos. But let’s keep looking at the structure.

Need for responsibility – political parties

Let me pick up where I was reading in Consent of the Governed, page 53.”

“By 1796, Jefferson himself saw that responsible majoritarianism required the organization of political power through political parties… It had become obvious that the alternative to the organization of responsibility was unorganized irresponsibility…
… the dream of democracy as a “powerless” Utopia in which public action flows freely and automatically from the independent decisions of autonomous individuals … [is] still [here]. One of the consequences … has been the ability of men of power to deny that they have any … claims to be the ‘voice of the rank and file’ … the ‘spokesman for his constituency’ …
… the basic requirement for holding him responsible is a recognition that he has power – that is, he makes decisions … and his decisions are not the only possible ones that might be made. … only if power can be identified can it be held responsible. The purpose of democratic politics is not to eliminate power but to hold it accountable.”

“I never thought about it this way. But I think I understand his point. The focus on political parties ties issues to an identified group. As the pendulum swings back and forth, the parties can be held accountable for failed policies they’ve advocated and implemented in the past. The same thing applies to congressmen. But I have a suspicion that you think this process is far from functional.”

“And that’s a major understatement. We’ve already talked about the human reasons. I just have to jog your memory some. It is impossible for a society to hold its leaders accountable if the citizens themselves don’t have a common basic morality and the responsibility to support it. What we see in public uproars is better identified as mass hysteria or mass rage. They’re just emotional stampedes. And the people who are swept up in the herds are best described as being in the throws of a personal hysteria or personal rage. It’s the same mental condition that leads the citizens of a nation like Germany to follow a Hitler on a conquest of the world. And as the fabric of U.S. society tears itself apart under the pressures of cultural infusion, information overload, and religious radicalism, we will see similar aberrations in U.S. behavior. Until individuals themselves become rational and responsible, and demand that politicians be responsible and held accountable, and force the politicians to put teeth into the law to do this, the government aristocracy will just heard the public like sheep to the slaughter.

Need to limit the size of associations

But there’s also another process at work here. Why does the U.S. have a TWO party system? This is very different from many of the countries of the world. And it’s not as if Jefferson didn’t understand this issue. Let me read from The Social Contract again, which, by the way, was written in 1762:

“When cabals and partial associations are formed AT THE EXPENSE of the great association, the will of each such association, though general with regard to its members, is private with regard to the State; it can then be said no longer that there are as many voters as men, but only as many as there are associations. By this means the differences being less numerous, they produce a result less general. When one of these associations becomes so large that it prevails over all the rest, you have no longer the sum of many opinions dissenting in a small degree from each other, but one great dictating dissent. FROM THAT MOMENT THERE IS NO LONGER A GENERAL WILL, and the predominating opinion is only an individual one. It is therefore of the UTMOST IMPORTANCE for obtaining the expression of the general will, that NO PARTIAL SOCIETY should be formed in the State, and that every citizen should speak his opinion entirely from himself. When there are partial societies, it is POLITIC TO MULTIPLY THEIR NUMBER, that they may be all kept on an equality.”

" So, if I understand this correctly, it says that allowing large associations of people to form who’s vote is controlled by that association, is a bad thing. It essentially takes away the idea of ‘one man, one vote’ and replaces it with ‘one dictator, many votes’. It’s obvious that the founding fathers didn’t pay much attention to this document. I think the whole idea that voting machines are built with a ‘party lever’, which can select all the candidates from a particular party with one pull, is exactly what this paragraph was warning us against."

Why a two party system?

"Bingo! So why did the founding fathers get this so wrong? I’ll tell you why. Because, at the time our country was founded, we were NOT just a wild and carefree bunch of pioneers. We had already been a colony of England for over a hundred years. English government had a house of commons and a house of Lords which dated back to Edward III in the 14th century. Western society was still very authoritarian with a strong belief in a society split into two parts: the aristocracy and the common people. So, the U.S. might have been novel in DECLARING a ‘Democracy of the People’, but the rhetoric didn’t carry over into their actions. There was little novelty in the way the structure of our government was set up. HOWEVER, it’s easy to get fooled by the structure. It’s NOT what you think. What do you think the parallels with England were?”

"Hmmm... Trick question, huh? OK. The obvious answer is: the house of Lords is parallel to the Senate; the house of commons is the parallel to the Congress. So, go ahead. Stuff a boot down my throat!”

"With pleasure! Actually, I’ll give you a break on this one. I’m sure 99% of the people in the country would give the same answer. But it’s only half the answer. The other half is the TWO PARTY SYSTEM.

Right from the beginning, the people setting up the U.S. government, who were primarily wealthy land lords, tried to create a government ruled only by representatives that the wealthy would pick. Luckily, there were those like Thomas Jefferson and Madison that rejected that. So, stage one was to duplicate the English system to give commoners a strong voice. That would have produced two bodies, a Federalist Senate and a Republican Congress, divided by aristocracy and political party. Don’t be confused by the party names. The original Federalists would become today’s Republicans. And the original Jeffersonian Republicans would become today’s Democrats. Following English law, they would be about the same size. England has about 700 members in each house of Parliament.

But there was another problem to solve that took over the debates. That was the SIZE of the different states. If there were, say, two representatives per state, that would mean the small states, like Delaware, with only a few people, would have the same federal power as big states, like New York, with many people. Hardly a ‘one man, one vote’ situation. The solution, which was proposed by Roger Sherman and Ben Franklin, was to make the two bodies different in size and give them different roles. So the Senate was set up with two representative for each state – thus creating an EQUALITY for each state. The Congress was set up with the number of members per state based on the population of the state – thus creating an EQUALITY for each voter.”

"Man. This is already getting so complicated. And there are only two variables in question: states and populations.”

“And the same problem still has to be addressed when we consider world governments like the UN. Can of worms! BUT! There are actually some pretty simple solutions. Unconventional for A2s who can’t think outside the box. But very workable. I’ll get back to that. But the point I’m trying to make is, after establishing the dual size legislative bodies to solve the state size issue, BOTH subsequently became split along party lines. And it is the PARTIES that continued the division by aristocracy: the current Republicans being equivalent in thinking to the house of Lords; the current Democrats being equivalent in thinking to the house of Commons.”

"OK. Now the puzzle pieces fall into place: Republicans, aristocracy, business owners, free markets, individual freedom ( as long as it follows the aristocratic code ), control; Democrats, common people, labor, regulated markets, individual freedom ( not controlled ), cooperation.”

"Bingo! An ‘obvious’ puzzle, maybe? But it still leaves the MAJOR ISSUE unaddressed.”

"And by major issue you mean representation of the voice of the individual.”

“BINGO! Hello world! We are, quote, ‘a DEMOCRACY’! But the people are still being ruled as if we are an aristocracy. Back to Consent of the Governed, page 36.”

“American politics is not organized or conducted … to discover the will of a majority on public issues. The politician tends not to conceive his role as representing a majority … rather … as that of satisfying the many organized minorities.”

“OK. Our freedom is still yoked by the tyranny of the vote, and the tyranny of representation, and the aristocratic legislators still favor their friends who head up the corporations, the colleges and the professional associations.”

Inability to limit power

“OK? And are you just going to let this happen? Here’s what Livingston and Thompson said about that.”

“The free market did not produce a society of small, independent entrepreneurs… Unrestrained capitalism had produced a system of power… corporations which were, in effect, ‘private governments’ operating on autocratic principles… Democracy, whether in its liberal or its conservative interpretations, insists that wherever power exists in society, it be made responsible to public purposes… UNREGULATED CAPITALISM … meant IRRESPONSIBLE POWER.
The development of law and politics in industrial America… had followed subserviently at the heels of business, so that “REPRESENTATIVE GOVERNMENT means, chiefly, REPRESENTATION OF BUSINESS INTERESTS.
…specific laws always eventuate from conflicts and controversies… the machinery for making and interpreting laws tends to be used by the most powerful and influential segments… TO IMPLEMENT THEIR INTERESTS.”

Individual helplessness

“Let me try to sum this problem up with a quote I read to you before from Bertrand Russell in Beyond Good and Evil.”

“Apart from war, the modern great State is harmful from its vastness and the resulting sense of individual helplessness… Even in a democracy, all questions except a very few are decided by a small number of officials and eminent men; and even the few questions which are left to the popular vote are decided by a diffused mass-psychology, not by individual initiative.”

"So, you’re saying that we don’t really live in the democracy like we’ve been told we do. It’s just a charade. Just more of the same authoritarianism from the past.”

“Bingo! And people are absolutely blind to this. They have been brainwashed and are in total denial of reality. And I say DENIAL because it’s not that it hasn’t been pointed out to them. It has, repeatedly, for a hundred years. Here, let me read, again, what John Stuart Mill said in 1859 from On Liberty. Page 5.”

“It was now perceived that such phrases as ‘self-government’ and ‘the power of the people over themselves’ do not express the true state of the case. The ‘people’ who exercise the power are not always the same people over whom it is exercised; and the ‘self-government’ spoken of is not the government of each by himself, but of each by all the rest… ‘the tyranny of the majority’ is now generally included among the evils against which society must be on guard.. chiefly as operating through the acts of the public authorities.”

“Do you remember this?”

"Sure. But I’m glad you read it again. You added so much more about the whole problem that this really hits hard now.”

“Let me continue then.”

“Society... practices a social tyranny more formidable than many kinds of political oppression, since, though not usually upheld by such extreme penalties, it leaves fewer means of escape, penetrating much more deeply into the details of life…
The object of this essay is to assert one very simple principle… that THE SOLE END for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is SELF-PROTECTION. That THE ONLY PURPOSE for which power can be rightfully exercised over any member of a civilized community, AGAINST HIS WILL, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant. He cannot rightfully be compelled to do or forbear because it will be BETTER for him to do so, because it will make him HAPPIER, because, in the OPINION of others, to do so would be wise, or even right.”

“Now let that hit you hard as well. Because you will hear every LIE in the book when OTHER PEOPLE want to control what YOU do.”

"You mean, like, it’s in my best interest, or we have to be our brother’s keeper.”

“Bingo! When ONE PERSON tries to control ANOTHER, it’s NOT about the other. It’s about THEM. It’s about CONTROLLING their own FEAR. It’s about greed and power.”

"Huh. Again. Fear and the Seven Deadly Sins.”

Time restriction inhibits democracy

“Bingo! Let’s move on.

Another failure of democracy is how it handles hysteria. And specifically, democracy’s need for TIME. A democracy can NOT respond well to time pressure. In order to gather and process many viewpoints, a society needs a lot of time. In a period of crisis, adequate time is not available. In a period of high competition, democracy will create a lag that prevents nimble response. These two shortcomings are amplified by FEAR and GREED. So, the response in such cases is to subvert democracy – to IGNORE the fundamental principle! That has to have severe consequences, don’t you think? Can you think of a major negative result?”

“Hmmm… Oh yeah! The result is that many of society’s most critical decisions get made outside the democratic process.”

“Keep going. And what, then, are the principles that replace democracy?”

“Oh wow! POWER. GREED. Fear. And the Seven Deadly Sins.”

“Bingo! The great lemming chaser has finally learned one of his greatest lessons. There are only a few paths he needs to go down to answer most of the great questions of society. Now, don’t start thinking that because democracy falls apart under stress, that it doesn’t fall apart in more peaceful times. Democracy ALWAYS falls apart. Why? Because, the A2’s are only able to conceptualize interaction in terms of PREDITORY COMPETITION. They only know how to fight with each other.

Preparation of the budget

For example, how do you think a government budget is prepared?”

Political survival vs. public good - Government budget as competition

"Well. I don’t know the details. But I think there is probably only one logical way it could be prepared. First make a list of the things people want with the cost for each item. Then arrange the list by priority. Next, find out how much money they have to spend. When the sum of the cost of the items on the list, starting from the top, equals the amount of tax income available, stop. I mean, how can’t there be any other logical way to do it?”

“Ah ha! Can’t be any other LOGICAL way. You’re off by a mile. Let me read from Edmund Phelps in Private Wants and Public Needs. He is talking about how a Democracy actually sets a budget.”

“According to the economic theory of democracy, each government sets both expenditures and revenue collection so as to maximize its chances of winning the next election! This follows from the axiom that political parties are primarily motivated by the desire to enjoy the income, prestige, and power of being in office. Each party regards government policies as means to these ends; hence it pursues whatever policies it believes will gain it the political support necessary to defeat its opponents. Since expenditures and taxes are two of the principal policies of government, they are set so as to maximize political support. Out of this rational calculation by the governing party comes the budget. Rationality likewise prevails among voters. They vote for the party whose policies they believe will benefit them more than those of any other party. These “benefits" need not be conceived in a narrowly selfish sense, but consist of any utility they derive from government acts, including acts which penalize them economically in order to help others. The budget itself IS NOT ARRIVED AT by considering overspending versus OVER-ALL taxation, but is the sum of a series of SEPARATE policy decisions.”

“Do you see what’s happening? First, this process is NOT about what’s good for the people. It’s about getting re-elected.”

“The governing party looks at every possible expenditure and tries to decide whether making it would gain more votes than financing it would lose. This does not mean that each spending bill is tied to a particular revenue bill. Instead all proposed expenditures are arranged in descending order of their VOTE-GAIN potential, and all proposed revenue collections arranged in ascending order of their VOTE-LOSS potential. Wherever these two marginal vote curves cross, a line is drawn that determines the over-all budget.
… It should be noted that the government in our model never asks itself whether the over-all budget is "too large" or "too small" in relation to the views of the electorate. In fact, it never makes any explicit decision about what the over-all budget size should be, but determines that size merely by adding up all the items that more than pay for themselves in votes. Similarly, the voters do not evaluate a budget on the basis of its total size but by the particular benefits and costs it passes on to them.”

"OK. This is ridiculous. But? Maybe it does make sense. People are obviously going to vote for the things that they need.”

“Single Sentence Logic. People DON’T vote for things. All they get to vote for is Presidents and Congressmen. And all the parties will include in their political platforms ars generalizations like lower taxes, better schools, and more jobs. So, with the Seven Deadly Sins at large, the government will always promise a spending plan they can’t deliver. It’s all magic thinking. And they will never admit to a spending plan that makes the people face up to reality. Let me keep reading.”

“In a two-party democracy like ours, each national election can be considered a contest between two prospective government budgets. These budgets DIFFER from each other in both quality and quantity, but EACH contains any spending and taxing measures about which there is strong majority consensus. In reality, many factors besides budgets influence people's political choices. However, most of these factors are in some way reflected in the budget… Knowing this, each party carefully plans its budget so as to maximize the support it gets…
A key feature of this procedure is that the government gives voters what they want, not necessarily what benefits them… For the government is primarily interested in people's votes, not their 'welfare, and will not increase their welfare if doing so would cost it votes.”

“So far, this has been all generalizations. So, let me read something more specific. He explains the psychology behind why people always think the budget is too large.”

Why citizens always believe the budget is too large

“There are two significant differences between transactions in the private sector and in the public sector... First, in the private sector nearly all transaction are made on a quid pro quo basis…”

“That means, if YOU sell me an item or service, I pay YOU specifically for that item or service.”

“… whereas in the public sector benefits are usually divorced from the revenues that make them possible… This divorce of benefit from payment for them makes it difficult to weight the costs and benefits of a given act and decide whether or not it is worthwhile...
The second major difference… is the coercive nature of dealings in the latter. Whereas all private transactions are voluntary, most payments to governments - other than direct sales of services - are enforced by law… the use of force makes doing business with the government an all-or-nothing proposition. In the private sector, a citizen can enter into those transactions he desires and refrain from those he does not desire. No such selectivity is possible in his dealings with government.
… While almost every man agrees with a majority of his fellows in regard to some policies, he also finds himself in the minority regarding others. . . The government must carry out a complex mixture of many policies, some pleasing to one majority, some pleasing to another majority … the government's gigantic policy mix is bound to contain at least one act which any given voter opposes. . . [therefore] the government is always spending money on projects he dislikes; hence his welfare would be improved if those projects were eliminated and his taxes reduced. Therefore every citizen believes that the actual government budget is too large in relation to the benefits he himself is deriving from it.”

"OK. I can see where this is going. Because of greed, people think the budget should only reflect their own interests. Since it doesn’t, everyone thinks the budget is too large.”

“Keep going with the Seven Deadly Sins psychology. If everyone feels the government is spending too much money, why don't political parties propose smaller budgets?”

"They can’t. To reduce spending, they would also have to give up some of the benefits people are asking for. That would lose votes.”

Political parties lie about spending

“Yeah, right. The problem is, THEY BOTH DO propose small budgets! It’s a classic snow job to tell the public that the other party is the big spender, but OUR party will cut taxes and spend less. It’s a BIG LIE. As soon as they get elected, both parties do just what I read to you. They structure the budget to get votes. And our political system nurtures this kind of hypocrisy. The more a party commits to cutting back, the more they spend when they get in. Why? Because they know the people don’t understand what is really going on.

Tax rates are not the whole story

The system is rigged. As long as the government takes taxes out of people’s pay in the form of withholding, people don’t actually ever see their money. ‘Out of site, out of mind.’ Furthermore, the way ‘taxes’ are defined, this process of taking money from the public is a BIG LIE. The politicians can quote ‘lower’ tax rates. But, if you look at your pay stub, you’ll find out that they withhold a lot more than the amount determined by the tax rate. Social Security and Medicare, for example, are not included in that. State income taxes, local property taxes and sales taxes are not included in that. License fees and registration fees are not included in that.”

"Sure. But the U.S. still has the lowest taxes of any country, right? My father said that in Germany, during the War, people had to pay 35% of their pay to the government. He said, if that ever happened in the U.S., people would riot.”

"Man is he blind! Have you ever even looked at an income tax schedule?”

"Ugh... no.”

Huge progressive tax rates – a lie

"Yeah, right. You are so brainwashed. You do know that the U.S. has a PROGRESSIVE tax system, right?”

"Ugh... sure. The more a person makes, the higher their tax bracket.”

"And how high do you think it gets here in the good old U. S. of A? Don’t answer that. I’ll just have to ram a whole load of boots down your throat, because you don’t have a clue. Up until last year, the top tax bracket in the U.S. was... are you ready for this... 91% ! “

"WHAT???? 91% ???? You’ve got to be crazy.”

"Yeah. I’m the one who’s crazy, huh. In February, President Johnson signed a new bill that lowered the top tax bracket from 91% to 70%. It also lowered the top corporate tax rate from 52% to 48%. So, what IS the tax in the U.S. Go ahead. Add in all the other taxes I mentioned. So, where are the riots?”

"Duh ?????”

"You are so brainwashed. OK. I’ll tell you why there aren’t any riots. There aren’t any riots because the rich people, who control the people who write the tax laws, have added so many tax loop holes that they hardly pay any taxes at all. And the poor people, who are the ones who actually pay most of the taxes, ARE BRAINWASHED JUST LIKE YOU! They’ve bought all the LIES.”

"Huh??? And remind me, why doesn’t the government only charge us for what we get?”

“For two reasons. One actually makes sense. Some expenses are really COLLECTIVE. That is, military actions, for example, protect or hurt the country as a whole. And the benefits of collective actions cannot easily be denied to those who would not have voluntarily contributed. The second reason is much more suspect. That is, the government wants to REDISTRIBUTE the tax money. They want to take it from everyone, but then give it out to special interests that they choose.”

"You mean like themselves!”

“Bingo! Right into their own pockets. Right to their own states; right to their friends or businesses they invest in. That’s why I said, the practice is very suspect.”

"Another case of the Big Lie, huh?”

**Faults in Human Nature and Society

Faith that moral order will rise above evil

“OK. Let’s make a major gear shift. Let’s now discuss the second major problem with democracy: the nature of man. Remember, The Consent of the Governed said, ‘The eighteenth-century view saw man as a rational, infinitely improvable political animal who could be trusted to govern himself ’? BUT, ‘psychology as a scientific discipline has led to account the dominant role of irrationality and selfishness in human behavior.’ What do you have to say about that?”

"Fear and the Seven Deadly Sins!”

“Good man, seal muncher. You’re well on your way to upgrade to walrus meat. The first problem is the error believing that human nature will rise above evil. Consent. Page 4.”

“The basic belief in a moral order, discoverable through reason or religion … has been irretrievably shaken by the specters of the concentration camp and nuclear terror. So also has the possibility of believing that the cumulative growth of science and technology is inherently beneficent. An age which promised unlimited and almost inevitable progress ushered in the possibility of almost unlimited inhumanity and brutality.
… Technology is alienating man from nature.
… secularism is alienating man from God
… Industrialism and urbanism are depriving man from a sense of identity.”

"Do you see the underlying assumption here?”

"I guess. If man was rational and self governing, then each of these situations might have gone the other way. Technology could have been used to bring humans closer to nature; industrialism and urbanism could improve man’s sense of identity.”

"Yeah? And what about ‘secularism alienating man from God’?”

"Hmmm… I don’t know how to comment about that?”

"Well, to begin with, the writer just assumes that moving away from God is a bad thing. I think you’ve learned, that isn’t so obvious. But, given that alienation is occurring, our society surely doesn’t believe it or even understand it. So, until it is understood, talking about it will just give society ulcers anyway.

Faulty basis - individualism

So, let’s expand the idea of losing a sense of identity. Let me keep reading.”

“ ..The eighteenth-century view was of society as a mechanical collection of individuals and viewed government as a device for registering the free, spontaneous and uncoerced decision of atomistic individuals... recognition now of culture, group life, mass media, status and social class in shaping expectations.”

"So, he’s saying that an ideal democracy was seen as a society of free individuals. Their goal was to construct a government that was responsive to each of their needs. So, in practice, it would be more like an information gathering and responding machine, rather than a GOVERNING machine.

Real reason to vote – to gather data

"And that’s the REAL REASON people should vote. A2s always think of voting as a CONTEST, either to elect someone or to select something. So they construct all kinds of game strategies around the contest process. For example, if enough early votes are available to declare a winner, the others don’t vote because they say, ‘what’s the use. It’s already over.’ Or if there is a marginal candidate, they say, ‘why would you vote for him. That’s just throwing your vote away.’ Or they want to see who’s got the best chance of winning and vote for them.”

"Hmmm… Sure. They are thinking that the goal for them is to align with the winning team.”

"Bingo! Or, if they don’t vote, it’s not important because they are just one vote in a hundred million anyway. They have no identity. They are insignificant, helpless. BUT! What if voting is treated like gathering information? Then the whole philosophy changes. No matter when a vote comes in, it is still significant to the outcome. And every single vote is important. Do you see the difference? Do you see why?”

"Hmmm… Sure. When you are voting to select a winner, it’s a SINGULAR outcome. Only one candidate wins. Or one piece of legislation is chosen. All the votes behind that get lost in the singular win. But with information gathering, even a 75% to 25% result carries the significance of the precise number. Without any one person’s vote, that might be 76% to 24% for example. And the size of the number tells a lot about what people think.”

Communication effect on responsibility

"Right! And you are just skimming the surface. Think of what the last part of the quote was saying. We are not an isolated bunch of colonies anymore. In 1776, what happened to a bunch of angry farmers in Maine might as well have been on another planet for the farmers being flooded out in Pennsylvania. The isolation made each citizen very conscious that they had to both UNDERSTAND and TAKE RESPONSIBILITY for how their local society worked. But the isolation also limited their range of concerns. People in Florida didn’t worry about ice storms. People in Maine didn’t worry about hurricanes. In 1966, that’s all over with. Any unusual situation anywhere in the whole world will show up on the evening news. Now every person is exposed to all the concerns in life. If a school bus runs off a road in India, we see the horror in Technicolor the next day. People in Maine start worrying about their own children because of that.”

"Yeah. I see where this is leading. Sure, local people have problems to worry about. But, having lived with them, they have them pretty much under control. But when they are flooded with crises that they aren’t familiar with, it causes them anxiety. It shapes their expectations.”

"Thank you for the understatement, Sir Nanook. Because the effect is much greater than just personal anxiety. Think about how people manage the new enormity of the problem and that anxiety. They change their whole philosophy of social structure. The result is a loss of the belief that they, individually, can interact with their neighbors and work things out. If WE, as a modern people, Mr. farmer from Maine, has to now address the destruction of hurricanes in Florida, because it will affect what he sells, or tools he can buy, he has to do a lot more than meet with his fellow farmers and corral the horses. So this creates a totally new ethical requirement for that specific farmer in Maine to demand a national, or even international, disaster relief organization. Do you see the slippery slope coming?”

"Sure. Environmental disasters, crime, military action, plagues, fire, famine… there’s no end to the list.”

"Right. Now extend that thinking. What about non-disasters? What about normal life?”

"Wow! You’re right. If the kids in Florida are not getting educational opportunities equivalent to those in Maine, the news starts screaming.”

“And right they should. So now you’ve added inequalities to the list: education, labor problems, taxes, gas prices, social rights, liquor laws and on and on. And every one of these shows up on YOUR TV and MORALLY demands YOUR attention. In short, in 1966, the responsibilities imposed on individuals are totally different from when the Constitution was written. But the principles in the Constitution underlying our government still haven’t changed. Let me finish the quote from Consent that I started before.”

“…[one] group of critics holds that our difficulties lie not in the traditional dogma but in their corruption…”

"By dogma, I guess he means the basic ideal of democracy, right?”

“Right. He’s saying that in the modern world, democracy, as implemented, is corrupt.”

“… citizens must act out the role traditionally required . . [active, political, social benefactors. BUT] . . in practice, voters tend to behave . . as private persons, seeing politics as a device for promoting their… special interests AGAINST those of others… The result is an electorate that can be manipulated by appeal to private desires, rather than a ‘public’ to which reasoned arguments about public policy can be addressed.”

"Yeah. I see the problem. The early ideal of democracy used by the founders assumed that all people dealt with much simpler problems in a much smaller local world. And maybe they even had more time to sit around the fireplace and think about those problems philosophically as they affect the overall community. But now the world of the average person is a lot bigger. There are a lot more issues to address. And the problems have become too complex for people to understand. To deal with that, they run away from dealing with a world view and focus on just defending themselves.”

National political ignorance

“The growth in complexity is a very big issue. Here is a discussion about this from Edmund Phelps.”

“… in order to vote rationally, each voter must know what policies the government and its opponents espouse. But in the real world, information is costly - if not in money, at least in time. It takes time to inform yourself about government policy. Furthermore, the number of policies that a modern government has to carry out is vast and their nature astoundingly complex. Even if the world's most brilliant man spent twenty-four hours a day reading newspapers and journals, he would be unable to keep himself well-informed about all aspects of these policies… Beyond the free information he picks up just by being alive in our media saturated world, he does not see how acquiring detailed political data will make him better off. Thus a rationally calculating attitude about the use of time leads him to political ignorance. This conclusion is borne out by countless polls that show just how ignorant the average citizen is about major political questions of the day.”

“Now, there are a lot of ways to solve this problem and produce a more intelligent population. Education is one; specialized agencies to summarize political information is another; specialized groups of people who can be trusted to give a balanced analysis. But the government has all kind of excuses for not creating these groups. But the truth is, the political types don’t WANT to solve the problem. They believe they will be put at a disadvantage when they get the opportunity to capitalize on a political disaster in their opponents camp. The LAST thing they want is people who think for themselves holding real truth. Such people can’t be swayed by control tactics. So, in the face of complexity, the people turn INWARD and right into the arms of... come on Nanook... say the magic words.”

"Fear and the Seven Deadly Sins! Thank you! Thank you! Prize please!”

I stood up to take a bow.

“Sure. Keep on dreaming while I keep reading.”

“…the failures are due not to the sovereignty accorded to the electorate, but to the frustration of that sovereignty by power groups and elites.”

“Got that? The inability of the public to influence government action is NOT a failure of the rights they have been given in the democratic process, but to the ‘frustration’ of those rights by the power groups and elites who control the representatives.”

"OK. I think you made your case.”

Trigger words - Desire to own good words

“Bingo! You are now permitted to use your ‘take all boots out of mouth free’ card! And with that, I’m going to get us some more coffee. While I’m doing that, it’s your turn to read. Let’s look at another aspect of how people get manipulated. Here. It’s underlined. Consent. Page 2.”

“… just the invocation of ‘Americanism’ promotes ambiguity about what that symbol means and glosses over issues that need to be understood and debated.”

"OK. Symbolism. Right. Single Sentence Logic. If you want to throw the public off track, you use one of the emotional symbols, like: drugs, sex, and rock & roll.”

“Wait a second. I didn’t hear ‘Americanism’ in that list.”

"Sure you did. You just didn’t recognize it. The new Americanism IS drugs, sex, and rock & roll.”

“Bit it the hind parts! You snuck up on me on that one. But, you’re actually right on. Keep reading about that on page 30.”

“… a tendency to identify prevailing and orthodox beliefs with democracy …to rewrite the past to make it accord with currently fashionable prejudices.”

”Do you see where this is going? The real ideals of democracy have been lost. People are told that democracy means all kinds of things. They don’t know where to turn. So they turn to self protection. This is exactly where the elite A2s want them. Way easier to control. And how do you control a mass of A2s?”

"Fear and Single Sentence Logic!”

"Man! You’re getting pretty quick with that gun. And what is the key driver of Single Sentence Logic?”

"Trigger words!”

"You’re going to ace this course, I’ll tell you that. And that’s what you have to keep your eyes open for. TRIGGER WORDS! That’s how the politician are going to manipulate you. Relating to what you just read, Livingston tells us that one of the ways this symbol manipulation works is for the reigning elite to continually change the definition of important emotional words to fit the current times. So, democracy is now being DEFINED as the way the U.S. government works. That is, we vote. So, that’s what democracy is. We have representatives. So, that’s what democracy is. Here let me give you a great example. Carl Sagan. Page 428.”

Symbols revered rather than substance

“I also wish that the Pledge of Allegiance were directed at the Constitution and the Bill of Rights, as it is when the President takes his oath of office, rather than to the flag and the nation.”

“Why would anyone ever PLEDGE allegiance to a flag?”

"Wow! I’ve done this every day of my school life and never even asked that question. I mean, how stupid can we get! Maybe we should pledge allegiance to the color blue or something.”

"And if you raised this question, the country would go into riots. The pledge should go hand in hand with a person’s agreement to a SOCIAL CONTRACT. The word allegiance comes from the French word liege, which is a person who is obliged, or obligated to serve a master. So, is our master the flag? Of course not. Our master is the law that we have agreed to uphold. So, if you were a power hungry leader, why wouldn’t you want people to pledge allegiance to the law? Why would you want them to pledge to some banner? I’ll give you a hint. Put on your devious thinking cap.”

"Hmmm… If we were told to pledge allegiance to the Constitution, I guess we might ask what we were really pledging to. And if we dug into it, we might see how really screwed up it is. But a piece of cloth with stars and stripes is all symbolism. They can wrap up ANY nonsense in the flag and people will still buy it.”

"Bingo! I’m so PROUD OF YOU. If I had some gold stars, I’d put one right on your parka and give you a sloppin’ big kiss!”

"Now there’s a SYMBOL! Getting a smooch from the rear end of a giant lemming!”

"Drink the coffee man, before you start rowing to Siberia!

But let’s stay with the symbolism issue for a moment. Because steering an A2 population using symbolism is part of the process of leadership. And for A2 leadership, the goal is to keep the people as ignorant as possible. It’s part of the corruption. But it also has some important implications. Here. Read. Consent. Page 5.”

Rejection of competence by A2s

“… the revolt of the masses is a revolt against competence and excellence… standardization of taste and judgment at the lowest common denominator…”

"I don’t get it.”

"When most people think about a population revolting, they want to believe the cause is great. They want to think that the masses are NOBLE. Why? Because people universally have a distrust of leadership. And for good reason. But the masses have NEVER been able to claim the high levels of knowledge typically related to the word ‘noble’. Why? Because masses in revolt have always revolted from being down trodden by an elite ruling class.

Historically, the ruling class wants the masses to salute the rulers and do what the rulers say to do. They totally DON’T want the people to understand what’s going on, or to think for themselves. And once people are used to following orders, they can be told to FEAR SMART PEOPLE. This becomes Single Sentence Logic. In such a situation, if a smart person were to run for president, they would be rejected for their intelligence. Can you imaging how distorted such a world is?”

"OK. I think you’re getting carried away. The world has a huge respect for intelligence. Einstein, for example.”

"Man. OK! You asked for it. Open wide! Stick both your feet in there. Do you have a clue how Einstein was treated? Do you have any idea how he was rewarded for his breakthroughs? He lived in a small tract house in New Jersey. He got to talk to all kind of political figures. In everything he wrote about those meetings, or that other people wrote, Einstein came away totally discouraged. So what’s the bottom line? Go for it!”

"Fear and the Seven Deadly Sins.”

“Bingo! Will miracles never cease! When people are confused, they totally revert to fear. The concepts we call intelligence, competence and excellence, all clearly represent things the average person can’t understand. So it is easy to scare people with images related to those concepts and get the people to run away from them. And this is one of the greatest ironies that the modern world will have to face. Because it is those very concepts that the world needs to survive. And it is truly a DOUBLE IRONY. Because, your observation about the average person’s admiration of Einstein, Galeleo, Newton, Aristotle and Plato, for example, is right on. BUT! What is the important driver here?”

"Yeah. Single Sentence Logic.”

“Bingo! Let me give you a specific example. The population growth supporters, who join the bastards at the top of the greed corruption list, keep using the argument that if the earth has a larger population, then we will have more Mozarts, and Rembrandts, for example. Here’s what Sagan said about that when he was discussing the founding fathers.”

“At that time, there were only about two and a half million citizens of the United States. Today there are about a hundred times more. So if there were ten people of the caliber of Thomas Jefferson then, there ought to be 10 x 100 = 1,000 Thomas Jeffersons today.”

“So, where are they? Sagan was right by the way. They are out there. So, why don’t we see them? Because society rejects what these 1,000 contemporary Jeffersons have to say. The same hypocrites who tell us to keep adding on to the population make sure that there are social structures that keep the great minds of today powerless.”

"So, you’re saying the people who are pushing for more population are just trying to feather their own nest?”

“Bingo! These are very shallow, self centered, power hungry people. They have no concern for the future. All they care about is maintaining a huge, poor, dependent labor base under them so they can continue to rake in greater wealth. And, of course, they will generate the propaganda so the masses mouth their slogans.

Entitlement - NEED

While this discussion of the failings of human nature may seem pretty bad already, so far, I’ve kept the gloves on. Now let’s go for the jugular. Hit me with the key words, oh great Nanook!”

"Fear and the Seven Deadly Sins!”

"Strong work man! You get two boots-out-of-mouth-free cards. So, it’s time to look directly at the key driver: GREED. Here is a neat way to start this from Robert Ringer.”

“Democracy without limits fails due to greed and envy, of both people and leaders, implemented through the word ‘NEED’. Need has been equated to “rights”.

"Ooo Kaa! I can see it coming. The word NEED has become a symbol!”

American dream

"Bingo! Which thus makes it a tool of manipulation by all, far and wide. I NEED food; I NEED clothes; I NEED a new car; I NEED a bigger house. I NEED to have what everyone else has, even if they ARE movie stars! ‘I’m ENTITLED to it!’ “

"Right! The ‘entitlement’ word!”

“Bingo! And at this point in our national social development, this word, ‘NEED’, has already become a nightmare. Why? Because the country is loosing its common moral foundation. It’s loosing its common definition of human life and human purpose. It’s loosing the common foundation for its concept of the AMERICAN DREAM. Why is this important? Because, if we don’t have a common model to assess what is a satisfactory life for each person, then how can we possibly have a common definition for the word ‘need’? And, most important, how can the individual establish their own personal definition of need?”

"Sure. I see the problem. Without an OBJECTIVE STANDARD, the human will be driven to set their own standard very high by fear and the Seven Deadly Sins.”

"Bingo! And without rational citizens as the working model for the nature of man, there is no basis for any ideal model of democracy.”


“Hang on. We’re not quite done. Now I want to introduce you to the twin sister of entitlement: JUSTICE. When ‘justice’ is faced with the same entitlement questions, her response is: I HAVE A RIGHT to what everyone else has.”

"Sure. Makes sense. And the idea of a ‘need’, or an entitlement being a RIGHT puts it squarely in the hands of the government.”

"Bingo! As just an unfulfilled need, it might have been the province of the churches or philanthropies. But as a ‘right’, it’s now in the OPEN ARMS of the government. And why would I use the term OPEN ARMS here?”

"Hmmm… Why? Let’s see: human emotions, Seven Deadly Sins, lots of money involved, symbols everywhere. It’s a perfect political football.”

"Yes sir. And you have NO IDEA how much this one issue pervades politics. It’s the Holy Grail for them. Think about it: Social Security, Medicare, Medicaid, Welfare, Fannie Mae, etc. etc. Think of the money that moves through these channels - all justified based on NEED.”

"So, we’re a ship adrift without a rudder.”

"Good metaphor. But way understated. We’re a planet drifting in space that is now dominated by a life form with the technical ability to blow itself to smithereens. Its also on course to drive itself back into a Dark Ages. And the scary part is it doesn’t show ANY sign of recognizing its vulnerability or understanding how to AVOID the catastrophe. The one condition needed to solve all the equations leading to a beautiful future is WISDOM based on REALITY. And THAT we don’t have.”

"So, are you saying we’re facing a full parallel to the collapse of the Roman Empire? Then who are the Huns? Who are the barbarians that will over throw us? The Chinese?”

“Nanook. Do you remember the line from the Pogo Comics? ‘We have met the enemy and he is US.’ The enemy is IGNORANCE. The enemy is superstition. The enemy is fear and the Seven Deadly Sins. The enemy is INTERNAL, just as it was in Rome. The Huns could never have come in if the doors weren’t already open. The Roman legions were invincible - before they became just figureheads.

. . . . .

. . . . .

So, how do we find our way out?

growth in complexity of human knowledge

"How do we overcome ignorance? Simple! Is the Pope Catholic? However, I think I’ll drink some coffee before I try to answer this. It goes down easier without boots and gravel in the way.”

"Smart move. And I’ll save you the embarrassment. Yes, EDUCATION would be one of the key answers, IF, education wasn’t in the toilet. But it is. So, it looks like we are finally in a real jam.”


"One of the ironies for me in this whole discussion is the critical role that human nature plays in every political issue. I mean, socialism fails because of Greed and human laziness. But the same element, Greed, when aligned with zealousness, the opposite of laziness, is the destroyer of capitalism and democracy.”

“Bingo! Which is why Father V spent so much time on that when you were talking about the Seven Deadly Sins.”