The Full Stack of Society: Can You Make A Whole Society Wealthier? [RECAPS ONLY]

This is just the Recaps, a TL;DR of sorts, from my essay: The Full Stack of Society: Can You Make A Whole Society Wealthier?

The Full Stack in all its glory. I like to summarize my essays up-top for people with jobs and/or Social-Media-addictions, but they say a picture’s worth a thousand words so I made this instead.  Note: UBI = Universal Basic Income

The Full Stack in all its glory. I like to summarize my essays up-top for people with jobs and/or Social-Media-addictions, but they say a picture’s worth a thousand words so I made this instead. Note: UBI = Universal Basic Income

Feudalism Recap

I made this high quality picture to explain it for my fellow Millennial readers

I made this high quality picture to explain it for my fellow Millennial readers

Minimal Wealth-multiplier on labor, with “fees” to even participate in the labor market that approach the value of all the Wealth you can produce

Result: Zero Surplus Wealth generation for Workers, with all the Surplus Wealth captured by Asset Owners

  • Today’s Feudalism:

    • Take it & Tax it policies receive strong populist support from voters who look out the window and see a mountain of education debt, auto loans, urban-slum-lord rent extortion, all laying claim to their earnings with no viable path upwards

      • In America today, that base of voters who look out such a bleak window turn their support to representatives like Andrew Yang, Bernie Sanders, and Alexandria Ocasio-Cortez, all of whom continue to shock the traditional mainstream prognosticators with their diagnoses and prescriptions that sound…well, Feudal.

        • To the extent that traditional prognosticators have their positions by virtue of achieving success in today’s America, they will continue to be surprised and offended by this worldview — afterall, if they made it, anyone can! Right?

Meaningful investment opportunities are rare & heavily-gated, and ownership of Wealth-generating Assets unlikely for those who don’t already own them

  • Today consider:

    • Who benefits from the immense asset inflation of the last 10 years (spoiler: people who already owned assets 10 years ago, not a ~2020 college grad who has to “buy-in” at the inflated prices)

    • Or which investment choices made by tax-protected college endowments are even available to the average American (spoiler: not many)

    • Or how easy Silicon Valley makes it to invest in hot consumer Tech Companies, one of the major sources of growth in the S&P500 and an area that average consumers might even have a comparative advantage in understanding vs. disconnected investors (spoiler: not easy, and only at the highest price)

Mercantilism Recap

I think this is a decent drawing, but seriously, if you know a better artist, please get them to email me!

I think this is a decent drawing, but seriously, if you know a better artist, please get them to email me!

Wealth can be created from Trade (confusing to many non-economists). 

Wealth from Trade can be Captured to the benefit of a nation or an individual (confusing to many economists). 

Capturing Wealth via political means incurs a cost that immediately reduces the Total Global amount of Wealth outstanding (obvious to all economists since Smith, Ricardo, & Bastiat). 

Occasionally the Wealth Captured by one party is greater than the amount of Wealth they would lose via the reduction of Total Global Wealth incurred by their act of Capture. The study & practice of this is, broadly, Mercantilism. It is possible to benefit from a bigger slice of a smaller pie. This heretical thought is of course deeply seductive to every 2-bit politician looking for a free lunch, a particular plague of democracies, and so much of modern economics has taken the defacto stance that this is in fact impossible. It’s a bridge too far, yes, but it’s a claim that’s made with a reasonable appeal to The Greater Good — afterall, the average political hack would default to Cronyism or Populism in ZERO seconds if they ever learnt this stuff, and most economists would rather bear the sin of a white-lie than be blamed for the collapse of The Long Peace. This is the Trade Lie” Eric Weinstein referenced in his popular tweetstorm of 2017. Watch the YouTube link (timestamp: 46:50) in said tweetstorm for more discussion.

Wealth creation through Trade means more people are exposed to the Wealth creation process, necessitating service providers & facilitator industries who can provide differentiated value and Capture some Wealth for themselves

  • Think: merchants, lawyers, bankers, accountants, managers, naval engineers, etc. etc.

The system is Fragile, with many weak links that can be exploited by a hostile adversary to cause a downward econo-political spiral resulting in total loss of sovereignty for the victim — causing constant paranoia, predatory Geopolitics, and a tendency toward a single Global Hegemon

  • There’s not a major Mercantilist Political Movement in the U.S. right now (besides the Corn Lobby), perhaps because the outsized Wealth creation from Mercantilism is so obviously funneled into a tiny group of people that it’s never going to fly in a Democratic system

    • Alaska’s Sovereign Wealth Fund — with its Oil profits distributed to Alaskan Residents — is perhaps a good example of Democracy and raw-materials-Mercantilism working together, and it seems to run smoothly and keep everyone happy…

      • The [Democratic] Socialists in American politics might do a better job convincing their die-hard opponents (if that’s even their goal?) that government can work smoothly by swallowing their distaste & pointing to Alaska, a deep red state with a GDP comparable in size to the Nordics, than far-away “smelly Europeans.” Just saying. Thank me later.

Industrialism Recap

If you haven’t noticed yet, the right-hand side of each image is a mirror of the left-hand side from the prior Stack, which is why these images are getting more complex (much like society)

If you haven’t noticed yet, the right-hand side of each image is a mirror of the left-hand side from the prior Stack, which is why these images are getting more complex (much like society)

Industrialism is everything Mercantilism aspires to be, with production brought in-house and the exported products being manufactured goods.

The Blueprint is simple: Build factories, import raw materials+fossil fuels, pay labor, and export the product into someone else’s consumption with the goal of accumulating currency, supported militarily & financially by a political power

  • Today this means:

Industrialist policies, ala Hamilton, receive strong populist support from the voters who look out their window and see other nations using political means to competitively advantage entire industries and reorient supply chains in their favor, shifting the Wealth-touching jobs & investment opportunities away from them

  • In American politics this provides a base of support for Economic Trumpism/Bannonism, both of whom continue to shock the traditional prognosticators with their diagnoses and prescriptions that sound…well, Industrialist. (There’s obviously much else shocking about about those two, but “Some jobs are just not gonna come back” is both mainstream doctrine and deeply depressing)

    • To the extent that traditional prognosticators have given up on the idea that the average American could be usefully involved in the profitable production and export of goods, they will continue to be surprised and dismissive of this worldview and how widely it resonates with people who want to work, make stuff, see it sold at a profit, and receive a decent share of the profits

Industrialism has more points-of-contact for Wealth creation since labor is now a valuable component of production and can command a premium, in addition to the standard cadre of Mercantilist service providers & facilitator industries (bankers, lawyers, accountants, managers, engineers, etc.)

  • As ever, Ownership of the Stack’s valuable resource (in Industrialism’s case: Economic & Political Capital) results in the largest possible returns. Such is life. But the slice of people who can touch & capture the process of Wealth generation is greatly increased due to competition among firms for labor (rising wages) and the entirely-domestic nature of the value-creation chain

Globalism Recap

Everybody smiling!

Everybody smiling!

Export the Knowledge & Capital necessary to Industrialize friendly trading partners, and then mutually profit from the increased Trade and Compound Wealth-generation from running Industrialism on both sides of the table, under the softly-(un)spoken umbrella of a Hegemon’s protection

  • Today this means:

    • Basically nothing.

      • While nobody appears to operate this way today, many who grew up & were educated by teachers who experienced the powerful Wealth-generation of Globalism believe that it’s still dominant today and that all domestic policies should move towards this system, for the rather obvious reason that it led to the largest Surpluses seen ever…

      • And did so (relatively) peacefully and increased the total wellbeing of the Industrialized World in a way that, for the first time, everyone could feel morally good about

    • You could make a strong argument, at least within the US, that many private corporations have adopted the “Globalism” worldview of mutually-compounding-Wealth-generation, with the “national border” instead set to a “corporate border”

      • Honestly I think this is a really good argument and could be its own essay, and you can see the moral-virtue of “jobs created” cited in defensive of private Wealth-creation & capture (see those links above), but all private corporations are still bounded by the International framework of competing Feudal, Mercantilist, and Industrialist laws & incentives, and without an enforced Globalist framework, it’s unclear who really holds the cards: the Mutually-beneficial Globalist Corporation or the Personally-enriching Industrialist Nation. China certainly seems to think they come out on top.

Financialism Recap

the_full_stack_of_society_FINANCIALISM.png

Borrow money, invest it in anything that will return more than it cost you to borrow, rinse and repeat and don’t stop repeating because everyone else around you will be doing the same thing, pushing prices ever higher. To run this Stack at the societal level requires at least one Global Financial Center and Reserve Currency status — giving those nations an “exorbitant privilege”.

  • Today this means:

    • America, Great Britain, Japan, France/Germany are all able to generate Wealth domestically by routing the flows of Global Capital through their own institutions

Financialist policies receive strong bipartisan support from politicians who know “putting it on credit” gets them points for delivering on promises without taking a hit with voters (in democracies) or soldiers (in non-democracies) by making cuts elsewhere. 

  • For Americans, that means we spent $6 Trillion on wars in the Middle East over the last generation. Did anyone really notice? Whose bank account was pinched? Last I checked, we just cut taxes…and my lights are still on, my 401(k) is up, and gas is cheap

    • While this works, and will continue to work, it leaves a niggling anxiety in the back of regular citizen’s minds, certain that they’d never run their household finances this way. Of course they then take out $100k+ per child for college, put the car on a lease, the house on a mortgage, and pay for their phone in monthly installments — it’s not like they’ve got other options.

Financialism has fewer points-of-contact for Wealth creation as compared to Globalism/Industrialism, but touching those points results in higher returns than ever before due to the power of Leverage: being able to borrow from your Future self means you can more easily compound your advantages.

The increased Wealth of those who are successful under Financialism pushes prices up at the same time as Wealth-touching employment opportunities at the median shrink vs. prior Globalist/Industrialist opportunities.

Such pressure on society creates a tension that pulls things towards Feudal solutions…