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The Gods Must be Crazy

BostonCoin Update – August-September 2019

The Gods Must Be Crazy (movie promo poster)

The Gods Must Be Crazy – Part 1

If you haven’t seen “The Gods Must Be Crazy”, the tiny independent movie from the 1980’s which put the “click-click” language into the mainstream and made over $100 Million from a tiny local African budget, go and discover it now. It’s a terrific PG feel-good comedy with a few great morals.

As the movie starts, we see a small tribe of people who live simple lives. They consider that their land, their food and all around them are gifts from the gods. When a mysterious object shows up, seemingly out of nowhere, the tribe assumes it is a new gift from the gods. The gods are always thought of as omniscient, all-wise and all good, so the ‘gift’ is treated as if it is a wonderful and benevolent thing… until circumstances show very clearly, that it is not.

The ‘gift’ shows itself to be a curse, and causes all kinds of mayhem in the lives of the people, until one lone hero decides that the ‘gift’ must be destroyed.

It is only from a much higher perspective which we can see that the ‘gift’ was in fact a mistake, and simply a piece of trash discarded not by gods, but by uncaring and idiotic men, without a single thought or care.

To those on the ground, the men from up above seem like gods. In reality, the men are no wiser (and perhaps far less wise) than the people who live simple lives.

There is a tendency for the normal population to assume that we are not clever enough to govern ourselves or run our own affairs; whether it be business, financial or political. We assume that we are not clever enough, so we elect some officials (who are also mere humans, like us) and elevate them to a status where they can make grandiose decisions and run our lives like proverbial gods.

Throughout history, this has never ended well. Those who are wise and kind and clever and benevolent enough to rule over others, seldom choose to do so, as ruling over others would be a conflict with their inherent good nature. Instead, we are left with politicians and bankers who are corrupt, scandalous, unkind or selfish; taking advantage of their office or their people for their own gain.

Repeating past mistakes is a new mistake

There have been several moments in history when someone could have shouted “The gods must be crazy!”. The French Revolution springs to mind, when aristocrats lived the high life whilst the common folk starved. This ended predictably with pitchforks and the death of many fat-cats who previously lived well at the expense of others.

Despite the super-wealthy being no more clever or benevolent than the common person on the street, we have to give them some credit. They have at least, learned one valuable lesson from history: do not repeat the French Revolution.

Nowadays, in the western world, there are far less visible signs of the common folk starving in the streets; the common folk can now starve to death slowly and invisibly from home. The rich are not seen to be extracting money from the poor through unfair taxation; the taxes are simply invisibly lower at the top than the bottom. Whilst the so-called “99%” seem to be receiving regular wage increases each year, much of the purchasing power is eroded by inflation. You can actually get poorer without realising it, thanks to the magic of numbers and statistics (be alert: these numbers are made up by the 1% who would call themselves “gods” of industry).

The elite “1%” who can control their income or control assets, can accumulate wealth much faster than inflation, and they also generally pay less in taxes.

Income inequality has not been around very long

We do not even have to go back to the halcyon days of the 1920’s or the “Happy Days” of the 1950’s to see better equality. In the late 1970’s, a company CEO was paid around 30 times what a normal worker received. That seemed fair, as the CEO had a lot more responsibilities and stresses then the average Jo.

If the stress and responsibility of running the company was thirty times more than answering the phones or cleaning the office, then it seemed reasonable and fair that the CEO was paid thirty times as much.

Somewhere during the 1980’s and beyond, the wheels fell off for the 99%, as the income of a normal worker climbed on average around 11% ahead of inflation. Over the same timeframe, the income for the CEO’s climbed over 930%.

We now have a huge economic disparity, where the big bosses used to earn thirty times the wage of a normal worker forty years ago, and now the figure is over 270 times.

Are the new super-high figures justified? Not according to all measures of performance. There is zero data that paying someone $100 million per year makes a company run more efficiently, and in fact, some CEO’s have run entire companies into the ground whilst enriching themselves. The massive increase in CEO pay has climbed at speeds 170% faster than the stock market, so company performance and stock prices have actually lagged far behind the pay increases.

Imagine if your income increased even whilst performance lagged… Yeah, right! That would never happen (unless you’re in the 1%).

The system is broken, and you will go broke unless you step up

Just when you were starting to think that maybe the system is no longer working, we also have CEO’s of major corporations who make substantial donations to political parties, essentially buying the politicians whom they want. Do not expect your politicians to be introducing a wage freeze on CEO pay, or implementing a larger tax on the super-wealthy; not whilst the super-wealthy are using politicians as their own personal puppets.

Yes, the gods are crazy. They are no smarter than you, yet they are paying themselves the income of a small town. These ‘gods’ are earning ten times what their fathers earned whilst not doing a better job than their fathers used to do 40 years ago, all the while, keeping their taxes in the single digits.

The same financial gods who enrich themselves at the expense of equality and performance will tell normal workers that a 5% wage increase is “more than fair”, because, “after all, inflation is only 2%”. It can be hard to argue with an important-looking man in a $5000 suit and $400 haircut, holding an official looking document. However, when you next buy fuel, food, rent, electricity or health insurance, see if you can dig out your expenses from five or ten years ago, to see if prices have only moved up by 2%; or perhaps it seems they may have climbed a little more? Inflation is not just what they tell you it is, it’s what you find to be true.

The Gods Must Be Crazy – Part 2

To add insanity to craziness, many of these financial gods have decided that they will no longer pay you interest on the money which they borrow from you. You will now have to pay them!

Your parents and grandparents used to lend money to the banks by making deposits, and they would receive interest; sometimes 5%, sometimes 10%, sometimes more. In years gone by, the interest income was enough to live on, leaving the capital safe.

A retiree who invested $1 Million in the 1990’s could receive a liveable income each year (between $50 000pa to $150 000pa), and a decade later, still have the same $1 Million with which they started. But the financial “gods” (boffins) could not leave this millennia-old system as it was…

Forget the 1980’s, the 1920’s or even the 1700’s… We are now seeing lower interest rates than the world has seen for over Five Thousand Years.

Switzerland, Sweden, Japan, Denmark; these are just some of the countries who are admitting to negative interest rates. Israel is putting on a brave face, paying a positive 0.1% on cash, but admitting that inflation is up to 3%. It may seem like you are making a pittance, but you are losing purchasing power for every day you hold money in the bank. In simple terms, your $100 deposit that used to make $5, now makes ten cents, and the price of goods has gone up by $3. In short: you are being screwed.

“That’s fine,” I hear you say, “I’ll just put my cash at home under the mattress where negative interest rates cannot eat it away.” That strategy may seem sound, however, it still ignores inflation, oh, and by the way, it’s illegal!

The Australian government has made it illegal to hold more than $10 000 in cash. Several countries in Europe have made it illegal to hold over 2000 euros. If you’re caught with a large block of cash, you could face a year in prison. If the government makes it illegal to hold cash, and the banks are “paying” negative interest rates, then your capital is being eaten. It’s not just the fact that inflation means it costs $120 to buy what $100 used to buy, but the negative rated banks will give you $90 back from the $100 you gave to them. It truly is that insane.