Strange Fusion: Thoughts Beyond the Box

Open Letter to the Minister of Energy of the Province of Ontario

2006-03-18T15:13:00.000-05:00

Recently the Ontario Government invited the people of Ontario to respond to the Government's plan for Ontario's energy future, as outlined in a booklet on this topic that was apparently sent out to every household in the province. The following is my response.

Dear Sir,

I would like to express my views as an Ontario resident concerning Ontario's energy future, in response to my receipt of the booklet, Our Energy, Our Future. I should like to say at the outset that my views are heavily influenced by my reading of the works of R. Buckminster Fuller (www.bfi.org), who alone understood in a comprehensive way the overall problems facing our society and provided viable and realistic recommendations for their solution. I am not expert enough in the technical details to provide specific factual statistics. However, I would like to sketch the conceptual outline of the plan that I believe should be adopted by the province, the specifics to be worked out by a coalition of experts in their respective fields who are willing to "think outside the box."

With respect to the sources of electricity, it is clear that burning limited fossil fuels and other non-renewable energy sources is the way of the past, and that we should put in place a plan to eliminate our dependence on oil and gas as well as nuclear, which produces ever increasing quantities of carginogenic waste with no realistic solution for its disposal. Moreover, since no technology is 100% foolproof, sooner or later there will be a nuclear accident, releasing vast quantities of radioactive pollution into the environment on an unprecedented scale, as has already occurred in Russia. Finally, the existence of nuclear facilities implies at least the potential to construct nuclear weapons, with devastating consequences if they were ever to be used. Buckminster Fuller described nuclear energy as self-incineration and an act of desperation. Canada should not be embracing nuclear. Instead, all nuclear technologies should be abandoned world around. Canada could lead the way in this movement.

Ontario should endeavour to maximize existing and undeveloped power sources based on water, wind, tides, sun, and the conversion of human and animal waste into methane gas. Buckminster Fuller pointed out that the total energy falling on the earth in the form of sunlight and wind far exceeds world energy consumption. To this end the province should not merely consider maximizing power generation that is distributed from a central facility, but also local decentralized power generation, in homes and other buildings. One aspect of this approach would be for the province to mandate that all electric meters be replaced with reversible meters, instead of the current smart meter plan, which is really quite limited and silly, whereby locally generated power that exceeds consumption can be fed back into the power grid while running the electric meter backwards, resulting in a reduction in electrical expense to the consumer and an increase in power on the grid. This is the right approach, encouraging energy production and reducing use instead of the opposite. The province should also promote scientific research and development into alternative high tech local power sources such as hydrogen fuel cells, etc.

On the consumption side, one hears constantly how difficult it is to "persuade" people to use less electricity. Perhaps the problem is that this approach to conservation is wrong. Instead, let's change the manufacturing process, so that appliances become ever more efficient and are redesigned so that they cannot be used inefficiently. One example that immediately comes to mind would be to raise the lowest possible setting on air conditioners, so that users cannot over air condition their homes. Office buildings in particular are extremely energy inefficient and should be completely redesigned. Making it illegal to leave lights in office towers on overnight is one obvious measure. Again, the government should fund scientific research and development into ways that electrical appliances and distribution systems can be made super-efficient, e.g., superconductivity. Superconductivity would also make the electricity generation system more efficient, so that less power is lost in transmission over long distances. Your booklet included references to energy efficient light bulbs and cold water clothes washing. Instead of trying to "persuade" people to use these things, make the sale of energy inefficient light bulbs actually illegal. Make it impossible to wash one's clothes in anything other than cold water. Ban all energy inefficient appliances and practices. There must be hundreds of things that could be done.

Finally, Buckminster Fuller pointed out that in North America the average efficiency of the average power generation plant is only 50%, due to the fact that far less power is consumed during the night than during the day. He proposed that all the electrical grids world around be interconnected together with one world electricity price, resulting in an effective doubling of available energy due to the fact that while one half of the world sleeps their excess power production capacity will be fed into the grid on the day lit half of the planet. You will find this proposal in his book, Critical Path, and elsewhere.

I think the foregoing provides an outline of an approach to power generation and conservation in Ontario that is far more progressive and visionary than continuing to rely on nuclear and non-renewable sources of energy to provide 57% of our energy needs (the OPA recommended electricity mix in 2025 according to your booklet). I hope you will consider a more adventurous and farsighted approach to these problems and create a detailed, viable plan based on the principles summarized above. We have 19 years. Surely in that time with the scientific resources at our disposal we can do better.

Taking It Back! Why Personal Financial Planning Is Socially Progressive

2006-02-24T18:25:00.000-05:00

Many financial planners, myself included, are inspired by a social vision and a personal mission that we think is empowering and socially progressive. To others, however, money-making seems conservative and antisocial. I encounter this attitude all the time. I find it disappointing though, because it means that those people have bought into the notion that they are oppressed and exploited and, by buying into that idea they perpetuate the conclusion that they are powerless and can do nothing. Thus they end up perpetuating the very state that they resent.

By eschewing active participation in the social economy that we all create we have turned the control of the economy over to the gatekeepers. We have all encountered these people many times in the work world. Petty, malicious, conceited, grandiose, reactionary, they are often found in positions of power - management, HR departments, and in the teaching, counselling, and helping professions - any place where they can use and abuse their authority over others to limit, curtail, restrict, exploit, demoralize, and oppress the people that they perceive as threats to the established order of things or some personal agenda, based on class, caste, privilege, race, religion, ideology, ethnic or national origin, gender, sexual orientation, or simply perceived personal independence.

The thing that I relish most about financial planning and investing in particular is that the gatekeepers cannot totally control it. True, the markets whorishly reward most those who put the most into them, i.e., the rich. Historically the markets have been the nearly exclusive prerogative of the rich, an "old boys club" in fact, but this is changing. Popular consciousness has still not caught up with this change, but it is real, and it will change the world totally.

Computerization and the Internet have already made access to accurate and extensive financial information and analytical techniques instantaneous, cheap, and nearly universally available, at least in the industrialized countries. This has in turn spawned the outgrowth of numerous discount brokerages, through which, for the price of a meal in an average restaurant, anyone with a few hundred dollars to spend can acquire shares in any public corporation trading on any exchange anywhere in Canada or the U.S. and, soon, anywhere in the world, directly, i.e., not through a mutual fund or other professionally managed fund. Yet only 10% of Canadians have ever bought a stock or a bond directly.

We may live in something resembling a political democracy, but we have yet to develop real economic democracy in this country, and the economy is where we live. One cannot help but wonder if this failure is a major reason why we are saddled with bloated, inefficient, and horribly expensive and corrupt government with consequent excessive taxation and extensive social demoralization. After all, if we all participated fully in the economy that we all create we would all become less dependent on big government, leaving more money for the truly needy while at the same time reducing taxation. Reducing taxation would in turn stimulate the economy, thus producing more jobs and greater prosperity for all, provided we invest in ethical and sustainable development.

These views may seem similar to the conservative agenda but they are not. Social conservatives do not really want people to participate fully in the economy, whatever lip service they may pay to so-called "free enterprise" (a code phrase for the dictatorship of the rich). Conservatives want an impoverished, dependent, servile working class that will do the "dirty work" for the lowest possible pay in the worst conditions with the least demands, enriching the rich whilst impoverishing themselves, based on the fundamental premise of "scarcity thinking," i.e., that there is not enough for all. A wealthy, successful, independent working class would not be like this. A wealthy, successful, independent working class will demand good pay, good working conditions, and interesting work in ethical and sustainable enterprises in which they are also involved not just as workers but as investors and citizens too. Perhaps here we have a major reason why financial education ranks so low in our public education system. I managed to complete 18 years of education in our public education system without "money" ever being mentioned, not even once. This is a great failing of our public education system.

I want every misfit, beatnik, hippie, freak, and skinhead to learn to read a financial statement and invest, attend stockholders' meetings and demand accountability, and make good money. Do you think you are impotent, exploited, and oppressed? Depending on your age, for the price of a pack of cigarettes you can beat the gatekeepers at their own game. Time is on your side. Computerization is levelling the playing field and soon the enemy will be in disarray. There are two ways to destroy wealth: seize control of the government and expropriate the expropriators, or seize control of the marketplace and beat the expropriators at their own game. Every game has its rules. Learn them.

When everyone has immediate access to the social wealth that we all create there will be no wealthy. The system of privilege will break down because everybody will be privileged. It will be a new world and we will all be the winners. Don't let them demoralize you. Refuse their obnoxia, the million and one ways in which they drain you of your vital resources, dollar by dollar. Don't allow yourself to be exploited by debt or enslaved by consumerism. Take the money that you throw away on these obnoxia and invest them in socially progressive enterprise. Each dollar that you invest will bring you one step closer to controlling your own life. It's your work. Take it back.

Infrastructure change is also necessary. The feudal institution of brokerage houses should be abolished and replaced by a national computerized registration system with universal access to all stock exchanges everywhere in the world and securities continuously available to every adult, effectively creating one world market paid for by the corporations themselves (this should be the only corporate tax). Banks should not be permitted to speculate with their depositors' money (nationalize the banks and run them like the post office, paid for by service charges on a non-profit basis) and margin trading should likewise be abolished. Shareholders meetings should be on the basis of one person, one vote, as Buckminster Fuller proposed in 1938, not one vote per share owned (vide Nine Chains to the Moon, ch. 29). And, most importantly, every high school graduate must be educated to understand how the economy works, how it affects them, what money is, and how to invest in the social economy that we all create. That these changes have not occurred shows the true agenda of those who have power.

Adam Redux: The End of Man

2006-01-15T10:18:00.000-05:00

When they think of "industrialization" most people visualize armies of servile workers sweating out short lives in enormous factories belching out smoke and pollution, dictatorial bosses and impersonal corporations exploiting and oppressing everyone and everything, the devastation of the earth's natural resources, pollution and environmental degradation, urban sprawl, cheap mediocre mass produced consumer goods, a brutalized dog eat dog world of unlimited competition and waste, selfishness raging out of control, and universal moral decay characterized by wars, crime, poverty, and perversion ending in the certainty of self-annihilation.

It took the genius of an R. Buckminster Fuller to realize that industrialism is an accelerating process of ephemeralization. These popular images, so rooted in the collective consciousness, are really characteristic of a stage of industrialism - and a fairly primitive one at that, one that we are already transcending as we enter the Age of Information. Who could have imagined 150 years ago the advent of atomic energy, superintelligent machines, genetic engineering, or nanotechnology? These developments and many others, both imagined and unimaginable today, are promising not merely to transform our lives but also our very nature as Homo sapiens sapiens.

The popular television show Star Trek represents a humanity that has largely overcome violence and poverty and has travelled to the stars, but the humanity that travels to other worlds is essentially the same as we are, both in physical appearance (albeit fitter and healthier) and in terms of their basic psychological capabilities, needs, and desires. In accordance with our cultural extroversion it hardly occurs to us that we ourselves may be so radically transformed by this process that the extraterrestrials that so fascinate us may not dwell on distant planets, but in our own not so distant future.

We are facing an historical watershed no less profound than the emergence of Cro-Magnon Man some 35,000 years ago, an historical watershed that, if successful (and there are no guarantees!) means nothing less than the transcendence of historical man. This watershed means not merely the transformation of the circumstances of our physical and social environment and life, but the very transformation of our biological and psychological nature, potentially culminating in the emergence of a new species, as different from us as we are from Homo erectus, our ancient ancestor who discovered fire between 300,000 and 1.5 milion years ago. The time frame for this transformation is much more likely to accelerated by a factor of 500. Even after so short a period, historically speaking, as 1000 years from now, humanity is unlikely to be recognizable to itself, if current trends continue. Yet earth is likely to continue to be inhabitable, astronomically speaking, for another 4 to 5 billion years (i.e., until our Sun enters its red giant phase), and the expansion of the universe itself may even be infinite.

None of the foregoing is inevitable, of course. The forces arrayed against us are considerable. Mankind may yet succumb to the paralyzing threat of totalitarianism, whether collectivist or capitalist, in which progress is stultified by powerful interests in the status quo, until the resources that could launch us into the future are irreversibly and inexorably exhausted beyond recovery. We may perish like the chick that, having consumed the white of its world, fails to peck through the shell that separates it from a boundlessness that it cannot even imagine. Or our new powers may destroy us through will, weakness, or accident. Somehow the universe seems to have encoded into it an inherent evolutionary wisdom that only those who possess the strength, vitality, courage, and curiosity to transcend themselves will succeed. However, the inherent progress of industralism itself also appears to correspond to a universal logic that must give us cause to hope that we will succeed in the end, although perhaps not till after the culmination of a terrible struggle. It is after all a choice, one that we must make soon if we are to survive.

And if we do survive, what might we become? Ultimately I see the whole industrial process moving into space, fuelled by the power of the stars, resulting in an unlimited prosperity. This process will eliminate the problems of limited resources, terrestrial pollution, and environmental degradation. The natural beauty of our planet will be reclaimed, with pristine wilderness interrupted only by great three dimensional terrestrial cities, penetrating as deeply into the earth as they rise into the sky, aquatic cities, and aerial cities, on this planet and on others, including the occupation of space itself. Biologically the man-machine interface will be completely transcended. Infintesimal natural computers containing the sum total knowledge of humanity will be implanted into the human bioplasm at birth. These computers will monitor and control our biological functioning, warning us at the first sign of trouble, detecting the signs of disease long before they manifest as overt physical or psychological symptoms. They will be completely transparent to our neural functioning, so that every human being being will be possession of a perfect and total memory, not merely of their personal experiences but of the experiences of all other people and the sum total historical tradition of humanity. These same computers will be programmed to inhibit any criminal impulse or desire, eliminating violence and crime altogether. Medicine will no longer be based on crude drugs, surgeries, or organ transplants. The human body will be understood as a complex interconnected energy organism, and manipulated on the molecular, submolecular, and atomic levels. Genetic engineering will have eliminated all genetic defects and diseases. Artificial organs and blood will replace human organ transplants and blood transfusions. Some organs may actually be voluntarily sacrificed in favour of superior artificial replacements, e.g., the eyes.

Biological man as we understand him shall disappear, to be replaced by an artificially and genetically perfected man-machine symbiosis with vastly extended physical and psychological capabilities and lifespan. The beginning of this process is already discernible. This and more is the future to which we are accelerating, perhaps even faster than we believe possible. As Buckminster Fuller saw so clearly, there are no solids, matter is malleable, reality is plastic, and ultimately humanity is the artist of its own destiny.

Toronto, Guns and Gangs: What of the Future?

2006-01-01T11:31:00.000-05:00

Like all Torontonians I am horrified by the events last Boxing Day in downtown Toronto, in which two rival gangs opened fire into a crowd of innocent bystanders, injuring half a dozen people and killing a 15-year old girl. But I was not surprised.

I was impressed by Mayor Miller's (who I very much like) statement that guns have no place in this city. I agree with him 100%. Guns have five legitimate purposes in society, in descending moral order: (1) to empower the military and the police to enforce morally legitimate laws; (2) to enable farmers to protect their crops from predators; (3) to enable hunters to kill wild animals for food and possibly for fur; (4) for target practice, for sport; and (5) as collectible objects. Only (1), (4), and (5) have any application within the city limits. In the case of (5), since the intention is not to use these objects as firearms but to appreciate them for their historical and aesthetic interest, we can accommodate collectors by requiring that all guns kept in private collections be permanently rendered inoperative as a condition of being so kept. Guns registered for target practice (4) should be kept under lock and key at a club approved for the purpose, and used only on those premises for that purpose. Otherwise, guns of any type should not be permitted within the city limits: there are no farms or wild animals suitable for hunting in Toronto. There is no reason for private ownership or possession of guns in Toronto, except as stated above. However, these measures will not solve the gun problem or the problem of gun or gang violence in Toronto.

I agree completely with Prime Minister Martin that the problem of gun and gang violence in Toronto is about exclusion. One hears much in the media, seemingly incessantly, about "Toronto the Good," how we are not like the United States, how peace, freedom, progressivism and tolerance reign everywhere in Canada - this has not been my experience walking the streets and riding the buses, trains and streetcars of Toronto and trying to find work in its workplaces, or speaking with hundreds of Canadians across the country.

We do not live in a society in which individuals are educated or expected to aspire to succeed, in which wealth and success are encouraged, in which creativity and opportunity are embraced as the inherent entitlement and destiny of every individual, in which individuality and difference are positively valued, in which power and empowerment are perceived as positive values, in which strength and joy are celebrated - whatever the media's and our political leader's lip service to the contrary. Rather, we live in a country in which corporatism and collectivism jealously guard their private prerogatives according to a mentality of "us against them," the basis of the false ideology of "scarcity thinking," in which work is doled out selectively as a reward for conformity based on the class and ideological prejudices of the employer, in which workers are regarded as serfs in a feudal corporative fiefdom ruled by capitalist lords, to be worked to the bone and then cast aside when their productivity is drained dry, to join the poor and the oppressed victims of drug and alcohol abuse, in which self-sacrifice, renunciation, and poverty still dominate the morality of the country. It astonishes me that recently we have beheld the spectacle of leaders of a major political party openly discussing public policy on the basis of their belief in Adam and Eve! The truth is that ours is a brutal, bigoted, cruel, ignorant, corrupt, divided and divisive ‘dog eat dog’ society - why be surprised then that the brutality and rage that we repress in ourselves returns to attack us?

So, what of the future? The defensive bureaucrats of corporatism and collectivism, the last desperate adherents of the British Supremacism that is the underlying historical legacy of this city and this country, will dig in their heels and knuckle down for the fight. They will become more, not less, exclusive, discriminatory, bigoted, and hostile. They will reinforce their fight to take control of the government of Canada through their arm, the Conservative Party of Canada. And the resistance against them will build, polarizing this city and this country in every sphere: rural against urban, English against French, white against Black, suburban against downtown, Canada against Toronto, citizen against immigrant, ignorant against educated, business person against academic, rich against poor - all the internal divisions and dichotomies of our society will become enflamed and exposed as our city and our country is wracked by wave upon wave of mutual retaliatory violence and our political, economic and environmental infrastructures continue to decline and degrade as more and more people fall into poverty.

That is, of course, only one possible outcome. The future is not predestined. Canadians can choose to change. Buckminster Fuller said that if we do not change we will be the last generation of mankind. The human race, having destroyed the preconditions of its own survival, will cease to exist in a civilized state, and perhaps even become extinct as a species. This is the fundamental crisis of our time, of which the recent event on Boxing Day in downtown Toronto are merely one poignant and local manifestation. Meanwhile our business leaders desperately scramble to reinforce their privilege and prestige against the coming storm, and our political leaders prate of the existence of Adam and Eve and "issues" so vague and general so as to be meaningless.

Hannah Arendt in her study of the Nazi war criminal Adolf Eichmann concluded that the essence of true evil is mediocrity. If that is true, then Toronto and Canada have much work to do. There is so much more that we can be and do. Ultimately it is the decision of each one of us to discover and to do it, but we also need to build a social infrastructure that encourages and allows that discovery and doing in each one of us. And this is where the political process is important. But even to do that we must first formulate the desire within ourselves to live with passion, to be aware and to pursue our inherent genius with passionate ecstasy and true resolve, to do which we need to recognize and discard the internal encumbrances and conflicts that inhibit and restrict us, and to cast them off decisively, effectively, even recklessly - to live, as Nietzsche, echoing Goethe, recommended, dangerously.

Intuitive Investing: It's Easier than You Think

2005-12-25T20:08:00.000-05:00

The Beardstown Ladies - a sorority club consisting of 16 rural women with an average age of 68, none of them professional investors - made financial news in the 1980s and 1990s by achieving a ten-year return of 23.4% on a portfolio consisting of about 20 stocks - better than most professional investment managers! Tony Robbins includes a reference to them in his Personal Power II self-development program. Their secret? Buying stocks based on products and services they like! This is also the advice of investment guru Peter Lynch, Vice-Chairman of Fidelity Finance and Research Company, who writes in his book, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market, that "any normal person using the customary three percent of the brain can pick stocks just as well, if not better, than the average Wall Street expert. If you stay half-alert, you can pick the spectacular performers right from your place of business or out of the neighbourhood shopping mall, and long before Wall Street discovers them." Why? Because while Wall Street "experts" spend their time isolated in the ivory towers of abstruse mathematical and financial theorizing and regulatory infighting, you and I - the men and women of the street - are down there in the trenches, experiencing the enemy fire first hand. We know what's going on because we are the recipients of the action.

The Beardstown Ladies are an impressive demonstration of Lynch's theory, but can their example be duplicated? I wanted to know, because I want to emulate their example. Recently I chose a list of companies based on two criteria: (1) something about the company had to impress me, on a purely qualitative level - call it hutzpah, progressivism, vision, innovation, quality, image, pizzazz, interest, design, whatever you want - something about the company really interested and excited me; (2) I was not permitted to know anything at all about its fundamental or technical characteristics, or to choose the company on that basis (I admit I fudged a bit on Innodata, a company I have been tracking for some time; however, their stock has gone down this year so in fact including them damaged my bottom line. Innodata reduced my performance by 4.3% but I felt it was dishonest to exclude them, having decided to include them in the list in the first place. As for the rest, I know nothing at all about their financials. I also devised this portfolio as a personal experiment, before I formulated the intention to post it here). In other words, my stock list was to be completely blind to all considerations other than the purely qualitative impression that the company made on me based on totally non-financial criteria - I was allowed to consider the company's products, services, history, philosophy, management, image, advertising, etc., but not the numbers. It didn't take too long for me to come up with a list. Here it is, as my Merry Christmas present to YOU:

Abercrombie & Fitch
Amazon
eBay
Google
Hewlett-Packard
Iconix
Innodata Isogen
John Wiley
Morningstar
Nautilus
Pfizer
Sony
Texas Instruments
Thomson
Yahoo

(I would have liked to include The Brick and Mazda, but I removed them from the list because I couldn't find historical data on these companies at the time.)

Using a combinantion of MSN Money, Yahoo Finance, and Morningstar I then "bought" one share in each company as of January 3, except for Morningstar which was not listed until later in the year. The annualized return on this portfolio works out to 23.0%. The beta of the portfolio as listed works out to 1.5, i.e., about 50% more volatile than the market average (keep in mind then that this portfolio is bullish). Keep in mind, however, that this is a watch list - you can vary the beta by varying the quanities of stocks in the various companies, the beta of which vary from -0.2 (Google) to 2.9 (Yahoo). The expected return, based on the Capital Asset Pricing Model (CAPM), using the US three month T-bill rate and the Wilshire 5000 index (the broadest based American index) works out to 7.7%. The alpha, indicating the percentage return that has been "value added" by the manager, works out to the difference, an impresive 15.3%. Not all of these companies are even very speculative - almost half of them are very solid, established concerns, thus ameliorating the risk.

About 90% of Canadians have never bought a stock or bond directly. Only about half of all Canadians participate in a pension fund. Yet many Canadians smoke a pack of cigarrettes per day. CBC recently reported that the average savings rate in Canada is now -0.5%! What is wrong with this picture? Do YOU have a discount broker? Do YOU buy stocks or bonds? If you don't, maybe you should consider starting a habit. The point of the foregoing is not to demonstrate what an extraordinarily astute and brilliant investment advisor I am. The point of the foregoing is to demonstrate that we ALL have access to greater potentials than we realize. It's about time that we ALL started taking advantage of them, and participating in the collective social wealth that we ALL create.

Merry Christmas and Happy New Year!

The Capitalist Cage: The Door Is Open

2005-12-18T09:16:00.000-05:00

When wild animals first began to be caught and collected and put in cages in public and private zoos for exhibition and conservation an interesting phenomenon appeared. First, the caged beast tried desperately to escape. However, the memory of freedom receded and gradually the caged animal accepted its fate. It grew lazy and lethargic, and slowly became domesticated. Once it passed a certain point of conditioning, it was discovered, the cage door could even be left open. The animal now accepted its cage as home, did not try to escape, and, if removed from the cage, became anxious and sought to return.

Since Karl Marx first propounded his theory of surplus value, the fundamental problem of socialist praxis has become how to redistribute alienated labour value back to the workers who created it in the first place without destroying the productive process itself. Centrally planned economies - the major historical alternative to market economies - whose advocates include such distinguished names as Einstein and R. Buckminster Fullerhave failed to achieve this goal in practice because of the extraordinary logistical complexities involved in organizing an advanced command economy, not to mention the loss of civil liberties resulting from the totalitarian encroachments of the state, whose agents have not always been as high minded as Einstein and Buckminster Fuller. Per contra, while capitalism guarantees theoretically equal opportunity to all, in practice the majority of opportunities have been reserved for the rich.

Aside from social redistribution, there are only seven basic ways of acquiring value: inheritance, marriage, entrepreneurship, investment, gambling (including lotteries), crime, and labour. Historically, the first four have been, with exceptions, the prerogative of the rich, the last three reserved for the poor. Of these, only entrepreneurship, investment, and labour actually produce value - the rest merely redistribute previously acquired value. These three categories of wealth creation also correspond to three of the four components of economic value or capital: intelligence or skill, money, and work, the fourth being material resources, which have no value in themselves but only acquire value in relation to the first three (albeit necessary for their realization).

The complete collapse of Communism as a viable ideology, represented by the collapse of the Soviet Union between 1985 and 1991, behoves us to reconsider the fundamental problem of socialism - the reappropriation of surplus value by the workers - under a different light. Socialism must work within the existing market system if it is to have any relevance at all to the current political situation, the application of all historical theories of social revolution having failed miserably. If the goal of socialism is the reappropriation of surplus value, we must look again at the existing means of wealth creation for any opportunities that may have been missed. The fundamental criterion must be universal accessibility by workers. When looked at in this light, only two of the seven basic ways of acquiring value summarized above approach the required criteria: investing and labour.

Social democrats have focused on raising the value of labour through minimum wage legislation, regulation, and unionization. However, such an approach is self defeating. Minimum wage legislation and regulation merely raise the cost of living by increasing the cost of doing business, thus increasing unemployment by making labour more expensive, penalizing the very people who such legislation is intended to benefit - the poor. Unionization may serve the interests of a part of the population, i.e., those who are unionized, at the expense of those who are not, but as soon as unionization becomes universal the economic benefit disappears for exactly the same reason as with minimum wage legislation: the increased cost of labour, now universally disseminated, merely increases the cost of living; thus one ends up precisely where one began (the qualitative benefits of unionization are another matter; e.g., conditions of employment, etc., are not addressed here).

The average worker is no better off in real terms financially now than they were twenty or thirty years ago. Clearly another strategy is needed. The obvious alternative is investing. However, until recently investing was a game for the rich. Although many stocks are affordable for many workers in theory - a board lot of a $2 stock is only $200 - access to the exchanges and hence to the market has been limited to those who can afford to buy a seat, at a cost of hundreds of thousands of dollars, or to full service brokerages who have charged exorbitant transaction fees, as high as $150, thus inflating the cost of trading to such a degree that only the rich can take advantage of it. Using the popular rule of thumb that the transaction fee should not exceed 2% of the value of the transaction, a $200 purchase of an affordable $2 stock becomes a minimum $7500 purchase at this rate. To acquire a diversified portfolio of thirty stocks based on these figures would require an investment of $225,000, compared with $6000 if there were no commission charge.

Faced with these charges workers have had little alternative than to purchase mutual funds, to the great profit of the professional managers, most of whom underperform the market averages while skimming their management fees and sales fees off the top, with little regard to performance. A quick check of the Morningstar database shows that, of 4920 mutual funds tracked, only 368 - 7.48% - outperformed their category average over a ten year period. Management and sales fees on a high quality mutual fund are taken off the total return of the fund, before anything is paid to the investors - the people who provide the fund's capital and for whom the fund is supposed to exist. These fees can easily reduce an outstanding return to an average one. The rich become richer while the poor, limping along on substandard returns (if they are lucky enough to have a pension plan, that is - only about half of the population do), pay through the nose. It's no wonder then that investing faces a bad rap. In fact, the vast majority of Canadians have never purchased a stock or bond directly, preferring wasteful, inefficient, and expensive political redistribution programs based on punitive taxation, which reduce incentives, opportunity, diversity, and employment throughout society. However, this situation is beginning to change.

Thanks to the advent of computers, the "old boys' club" of the investment industry is yielding to radical democratization. Prior to the advent of the Internet, the information needed to develop investment strategies and make investment decisions was scarce and expensive to obtain. Today, it is pretty much universally available, often free of charge, on the Internet. Although full service brokerages still charge exorbitant fees, discount brokers are now appearing, charging $30 or less per transaction. This reduces the previous $7500 minimum viable purchase to $1500. Canadian discount brokerages are still about twice as expensive as American discount brokerages, due to low demand and limited competition, but this will change in the foreseeable future, further reducing the amount of a viable transaction to $750. At this price, a diversified portfolio of thirty $2 stocks can be built up for about $22,500 - a far cry from $225,000.

Once workers obtain cheap and easy access to the markets, and are educated to make investing decisions for themselves, the demand for social redistribution will decrease, allowing governments to provide better quality social programs for the truly needy and better insurance programs for the rest of us. When one crunches the numbers it is surprising how little it really takes to become a millionaire, even allowing for inflation, but only a fraction of the population do. Many people, mired in outmoded ideologies of the past, do not realize they have options and potentials unrecognized. For example, I knew a young man, a 20 year old university student, working for a call centre, for very little money. He professed that he had no surplus income to invest, but I observed that he was a habitual smoker. Further discussion revealed that he spends $8 per day on tobacco. $8 per day, at an average real stock market return of 8%, compounded monthly over 45 years, works out to a real future value of $1.29 million! This example shows very clearly the insidious psychology of consumerism. This young man's corporate sponsored addiction, for which he is literally sacrificing his future success, could be replaced with a multitude of examples of consumer addictions - cell phones, fast food, junk food, fancy cars, pubs, clubs, drugs, entertainment, vacations, credit cards, and the list goes on and on...and on and on.

There are so many ways to spend money in a consumer culture and it's so easy. And this is just how the capitalists like it. A vast, undereducated, cheap, and indebted labour market is just what capitalists want to maintain the levers of power, cheap, dependent labour, and high demand for the "obnoxia" that keep the machinery of advanced consumer capitalism chugging. Old school "purist" socialists and workers who disdain to participate in market economics are, despite themselves, serving the interests of worker oppression and exploitation without realizing it. The liberation of workers in the 21st century will not be not served by such misguided idealists. Workers must educate themselves, assume personal responsibility for their financial success, demand to participate in the investment process, and refuse to allow themselves to be seduced by consumerist dependencies.

Real social reform is also necessary. The ubiquitous sales mentality is one of the most corrupting influences in the financial industry today. The culture of financial corporations and financial professionals must be transformed from sales to service. Management fees and commissions must be moderated and based on performance. Brokerage fees should be paid by the seller, not the buyer, as with real estate transactions, i.e., by the companies and funds themselves. Internet access to the markets and discount brokerages must be extended and developed, inessential costs reduced, regulations simplified and rationalized, the educational system reformed to encourage financial education and financial professionals, and the essentially classist and elitist presuppositions of the corporatist financial culture replaced with an attitude of social cooperation. Real wealth is not produced by the financial sector alone. It is created by the intelligence and skill, money, and work of every Canadian.

Principles and Policies: Moving Forward with the Issues

2005-12-13T10:08:00.000-05:00

The NDP web site identifies the following twelve issues for the current federal election: ethics, health care, education and training, environment, pensions, homelessness and housing, foreign aid, aboriginal Canadians, immigration, fiscal responsibility, employment, and crime. These are all excellent and important issues. Unfortunately, while the NDP web site is long on criticism of the Liberals, the NDP has missed this opportunity to present, clearly and concisely, truly progressive, alternative policies with respect to these significant issues. Instead, we find an attack on Liberal policies, some backward looking references to what the NDP has done, and some very broad, very general adumbrations, having no bite or vitality at all, similar to the "policies" that one finds at the NDP Talking Points web site. Where is a comprehensive and complete manifesto of the NDP policies and principles to be found that articulately differentiates the NDP from the Liberals? I have emailed the NDP and asked for a reference to such a document, without a satisfactory reply. I have googled for this and found very little. Jack Layton's book, Speaking Out: Ideas that Work for Canadians, is a great book, but where are these speculative foreshadowings incorporated into an integral NDP platform? I would like to know.

Positive Liberty: The Way Beyond the Socialist-Capitalist Dichotomy

2005-12-06T14:04:00.007-05:00

Socialism has allowed itself to become trapped in a false dichotomy, in which capitalism = freedom and socialism = slavery. Far from capitalist propaganda, historical socialism has in fact conformed to this expectation. The more socialist a state becomes, the more the individual is enslaved by the group and ultimately by the state, until a state of perfect socialism is reached in which individual liberty disappears entirely. I made this observation to a Marxist professor once whose response was, "You don't think you are free, either, do you?" In other words, he implicitly accepted the state of unfreedom on the premise that capitalism is also unfree. While true, this response rather misses the point. The goal of socialism has always been stated to be liberation. If socialism does not result in liberation, it must reexamine its premises. Historically, socialism suffers from the very repression that it condemns in capitalism. It is as though the repressed herd, unable to shake off the memory of its repression, merely replaces one form of servitude with another. Socialism and capitalism are both caught up in a struggle that can only end in anti-liberation, whoever wins. In order to achieve its own apotheosis, socialism itself must transcend itself, not through repression, but through assimilation of its opposite - assimilation and transformation, in the service of an ideal that transcends the dichotomy of self and other. In other words, it must sacrifice the idea of sacrifice itself, and its whole historical foundation in traditional notions of religion and renunciation. This is true dialecticism.