• Capitalism No Longer Works

    The ECB is going to create €1140 billion out of thin air and pump it into the euro zone economy for us lucky citizens. Should we be happy?

    My first concern is: where is that money going?

    The ECB will simply print money and use it to buy up euro zone government bonds held by private individuals and financial institutions. Those bonds can then be fed into the paper recycler. How many of these government bonds do you have? I have exactly none and never had any, nor any shares in any financial institutions. I suspect that the overwhelming majority of these bonds are held by the rich (let’s be fashionable and call them the 1%) and by the financial institutions, which in turn are also owned predominantly by the 1%. Hence, this €1140 billion is essentially going to the 1%. The illusion propagated is that they will use that extra money to stimulate the economy, invest in all sorts of creative endeavours, create jobs galore and we shall all be better off: bollocks. Trickle-down economics has not worked for the past 40 years and there is no reason to believe that it ever will.

    So what can we conclude?

    This is once again a transfer of assets from the public purse to the 1%, since we collectively bear the burden of the creation of the €1140 billion out of thin air, but the benefit goes almost entirely to the 1%. In the euro zone, this is already the third such massive transfer of wealth from the 99% to the 1% this century. The first was the Global Financial Crisis, the second was the Greek Financial Crisis and now this. The 1% are already swimming in money and do not know what to do with it, so untold trillions languish in tax havens around the world. The rich are creaming so much out of the global economy that there is little to nothing left to serve as discretionary income for the 99%, who live hand to mouth and watch every penny. That is why we have an ongoing depression and deflation in the euro zone and I do not see any reason why that would change. There is no money for consumption, hence no demand and hence no point in investing in any production facilities. Capitalism has ceased to function.

  • Greek Finances for Dummies

    To me it seems reasonably simple to analyse what happened to Greece and it is definitely much easier to understand than relativity theory, quantum mechanics or evolution. The Greek Financial Crisis had fundamentally the same cause as the Global Financial Crisis that brought it to light, but its roots go back much further and it demonstrates that European bankers were working the bonus scam long before their American counterparts woke up to the sub-prime mortgage version. Both these GFC’s were caused by conscious, fraudulent, criminal behaviour on the part of bankers seeking to maximise the bonus arrangements that greed-obsessed shareholders had put in place to “incentivise” them.

    These bonus arrangements paid significant sums to bankers who increased the apparent book value of the bank. If the bank increased its apparent value, then that generated an apparent profit and a percentage of that apparent profit was the basis on which real, hard cash bonuses were paid out to those who had supposedly worked so hard and so creatively to generate these profit improvements. To feather their own nests, the bankers became exquisitely creative: they created money out of thin air and poured it into black holes.

    Let us look at how this applied to the Greek case, which had been building up for decades. Firstly, let me emphasise that I do not consider the Greeks themselves entirely blameless for what happened. Their tax-evasion culture, excessive state ownership of very large parts of the economy, ridiculous over-manning of all government-run activities and total pandering to civil servant union demands made the country impossible to run in a financially responsible manner, irrespective of whether a left-wing or a right-wing government was in power. Hence, the only way to keep going was to borrow money to cover the current account shortfall each year. In most countries, such lending would be provided to a large extent by the domestic market, but the people with money in Greece knew damn well that the situation was structurally out of control and that the country was on a roller-coaster ride to bankruptcy, so they all kept their untaxed money stashed safely in tax havens, far away from Athens.

    Every year Greek politicians went cap in hand to the banks of Paris and Frankfurt and London and Amsterdam asking for billions in loans and the banks happily lent it to them. Why would they do that? Did the bankers not know what all the rich people in Greece knew very well? Of course, the bankers knew that. They knew exactly what was going on, but their bonuses came first. By lending another billion euro to Greece they could put an additional five to ten percent of that amount into the books as an apparent asset increase because they would be earning interest. Their personal bonus might only be a measly one percent of that amount, but 1% of 5% of one billion is a very healthy €500,000: not bad for a pleasant afternoon chat with the Greek Minister of Finance accompanied by coffee and a nice glass of Metaxa 5-star! Even funnier, the lower Greece’s credit rating went, the higher the interest rates demanded for the new loans and the larger the bonuses produced by approving them. That is what the Americans call a win-win situation. To top it off, for the larger loans sought in Paris and Frankfurt, there was an added political dimension, since the armaments industries were involved. The Greek Minister came asking for, say, €5 billion and was told “We are willing to lend you €7 billion on the condition that you spend €2 billion of it on purchasing our tanks, jet fighters, machine guns, whatever, to defend yourself against that aggressive, NATO ally neighbour of yours, Turkey.”

    And so, year in, year out, the loans accumulated and the bankers rubbed their hands in glee and pocketed their bonuses in hard cash. US financial advisors like Morgan Stanley also took a hefty fee for helping the Greeks hide the true magnitude of their accumulating debt and so the total external debt went from €100 billion to €200 billion to €300 billion and finally peaked at €360 billion before the GFC struck in 2008 and the shit hit the fan in the euro zone shortly thereafter. Over a period of maybe 20 years a few hundred bankers earned themselves I would guess €100-200 million in bonuses by throwing their bank’s money into an Athenian black hole! They knew very well what they were doing and were equally sure that they would never be held personally accountable for it. When the bubble burst and everyone involved realised that the chance a small country of less than 11 million people could ever pay back such an astronomical sum was miniscule, all those Greek loan notes were looking decidedly suspect. However, the bankers, to the best of my knowledge, paid not one penny of those real, hard cash bonuses back.

    €360 billion in debts to EU banks: that’s more than €33,000 for every man, woman and child in the country. Did the Greeks benefit from this? Somebody must have and those languishing in the bloated public sector certainly did, but the bulk of the population did not seem to have lifestyles any different from what we saw and found normal in other countries around the northern rim of the Mediterranean. In addition, all studies seemed to indicate that the Greeks worked just as hard and just as long as the Italians and the French and the Spaniards.

    The banks themselves, who, like most other things, are predominantly owned and definitely controlled by the rich elite (the 1% in modern parlance), saw that they had to unload those loan notes and what better place to deposit them than into the public purses of their own governments. Those public purses had just been gutted to save them from the consequences of the US orchestrated GFC, but since they are bottomless pits, let’s gut them again. The 1% finances the election campaigns, so they own the politicians in power. The taxpayers may grumble somewhat, but who cares, they are confused, uninformed, fragmented and toothless. Hence, the political instruments in Brussels and Frankfurt were instructed to work out a way to rescue the loan notes. The mechanism they came up with was that the euro zone central banks would guarantee new loans to Greece, ostensibly to aid in the restructuring and recovery of the Greek economy, but it fact to be sent straight back to where it came from to pay off those previous dubious loan notes. Up till now €246 billion in new loans have been arranged and that money has all gone into the coffers of the 1%. Meanwhile the Greek economy goes from bad to worse, an ever-greater proportion of the population descends into poverty, the young people with any education or talent are fleeing the country and there seems no end to this vicious circle of contraction and decline. The economy has contracted by nearly 30% in 5 years and tax revenues diminish faster that the savings from austerity in government expenditure, so the deficit increases.

    Let us be very clear about what is happening here. After having stolen untold billions of the taxpayer’s money worldwide to avoid the consequences of the GFC, those responsible for the problems have now stolen a further €246 billion from the euro zone taxpayers to enable themselves to avoid the consequences of their Greek adventure.

    Now we have Syriza in power in Athens: maybe it will get interesting. I have often thought that the 1% are using Greece as a guinea pig to see how far they can go. They want to keep squeezing the Greek population (the 99%) harder and harder till they find where the limit is: when will they break or revolt? Is this the revolt? If not, then we know what they have in store for the rest of us.

    PS: All the extravagant bonus schemes for bankers are alive and well and still in place throughout the Western world. They hang, like the Sword of Damocles, over our heads…

  • The Dutch Sandwich

    I am posting an updated version of this after having learned some new facts and figures from an Oxfam Novib report on the subject and several articles in the press. The magnitude of it is stunning and it has a disproportionately negative effect on most of the world's poorest countries.

    There has been occasional furore here in the Netherlands for many years concerning the fact that the country is a significant link in the global corporate and private tax evasion process. Thousands of foreign corporations, everyone from Apple and Google and IBM and Exxon-Mobil and Johnny Walker to IKEA and Starbucks and Amazon and Wal-Mart and SITA, plus celebrity names such as Abba, The Rolling Stones and U2, not to mention criminal organisations/individuals like the mafia, drug cartels and the families of the world’s dictators, some 11,500 in all, have empty shell holding companies registered in NL with no employees: Letterbox Companies the English call them. Many, if not most, corporations may also have separate legal entities here which are normal operating companies engaged in their primary business activities. These corporations are availing themselves of what unscrupulous accountants, like the big four: Deloitte, E&Y, KPMG & PWC, call the Dutch Sandwich construction.

    I had assumed that something questionable was going on, since for decades I was aware that many companies I dealt with while still working had holding companies but no activities here in Amsterdam. However, I was busy with other things and did not understand how it all worked until I watched a fascinating 50-minute YouTube documentary on tax havens produced by the Dutch public broadcasting producer, VPRO:

    That documentary gave a description of how the Dutch Sandwich worked through a very practical example. That example was a case where a UK Parliamentary Committee was trying to determine why Starbucks, which despite being very successful in the UK, consistently loses money hand over fist, year in year out, according to the UK corporate tax returns it submits. Despite that, the parent company is highly profitable in total, though it pays practically no tax anywhere. The Dutch Sandwich is an indispensible link in this profit-laundering global network and is applied in particular where royalties are involved. In NL royalty income (intellectual property) is treated separately and not taxed and there is little or no control over what constitutes royalty income.

    Hence, these empty shell holding companies are the vehicles through which so-called royalties are collected from all the operating subsidiaries. For example, let’s say for simplicity (the numbers are my own invention, but serve to illustrate the principle) that Starbucks UK Ltd sells coffee for on average £1 per cup and that the cost price of providing that in the UK (rental on premises, staff, ingredients, power, marketing, administration, etc., etc.) is £0.65 per cup. However, Starbucks UK, under its licensing arrangement with the holding company in Amsterdam, Starbucks International BV (the Dutch BV is the equivalent of an English Ltd), has to pay BV a £0.40 royalty on every cup they sell and they sell about 100,000,000 per year. Hence, poor, hard-working Starbucks UK has a turnover of £100M per annum with expenses of £105M per annum and thus a loss of £5M and that is what is reported in their UK corporate tax returns. Those losses, I assume, become carry-forward accrued losses for any future UK tax liability should someone pull the plug on this happy arrangement. Meanwhile, lucky Starbucks International BV has received £40M from the UK for doing absolutely nothing, pays no Dutch tax on those royalties, a small fee to those running the holding operation on their behalf (a bank or an accounting firm; usually one of the big four) and the remainder is shipped off in the twinkling of an eye to the Cayman Islands where there in no corporate tax and out of sight is out of mind. The bottom line is that Starbucks worldwide pays in total only about 1.6% tax on its profits, not one penny of it in the UK or in NL and has hundreds of millions sloshing around in tax havens at the disposal of its management and shareholders for creative wealth distribution schemes.

    Now, I call this tax evasion, but the big four call it “tax optimisation” and they have been getting away with it for decades. The Netherlands claims to profit to the tune of more than one billion euro per annum from this regime and it provides employment for 3,500 people in the financial sector, but that fails to take account of the fact that the Netherlands itself misses corporate tax income to the tune of 30 billion euro as a result of this construction. Foreign and mostly friendly governments suffer to the tune of many hundreds of billions in lost corporate tax revenue. In 2009 5.5 trillion euro of this kind of money flowed into the Netherlands, stayed a few milliseconds to register in the holding company bank accounts and then about 5.499 trillion of it disappeared off to a tax haven. By 2013 this flow had grown to 12 trillion euro. That is twenty times the Dutch BNP and a full 20% of the entire global economy! This is one of the networks enabling the elite to collect enormous sums in offshore tax havens: totalling already far in excess of 25 trillion euro last count I heard. This in turn drives the financial merry-go-round described elsewhere on this blog. The offshore tax havens, like the Cayman Islands, are often under British jurisdiction, but that is another problem. I was originally British and thus I am ashamed of our role in that aspect of this mess, but I am now Dutch and much more ashamed about the disgraceful Dutch Sandwich. People like me on middle class incomes pay a marginal tax rate of 52%, the billionaires pay little or nothing.

    The EU had announced in December 2013 its intention to try to limit these abuses, but I doubt they will have much success since any single member country can veto proposed changes of this nature. Most of the major political parties are owned and operated by the rich elite whose direct personal interest is best served by maintaining this tax evasion scam. Unfortunately, the Dutch are not the only ones facilitating the fiddling of the books: the Irish are also good at it, but via a different mechanism, which can apparently be used in combination with the Dutch Sandwich to avoid even more tax. When you have profits running in the billions, then even a 1% saving is a very interesting amount of money, tens of millions, from which one can pay for a lot of creative accounting and political party donations.

  • Global Financial Crises for Dummies

    A columnist in our local paper was complaining about a TV programme on the Global Financial Crisis (GFC). The programme was an interview with several economists soliciting their views on the reason for the situation with our finances. They all had different opinions on what had gone wrong and, in my view, not one of them was correct. However, the columnist correctly concluded that with advice like this, how could one expect the Minister of Finance to determine what to do, let alone hope to enlighten the man in the street.

    My assumption is that nearly all economists and all well-informed politicians have good financial reasons for pretending not to agree on what caused these crises and for avoiding attempts to get to the truth. To me it seems reasonably simple what happened and it is definitely much easier to understand than relativity theory, quantum mechanics or evolution. The Greek crisis had fundamentally the same cause as its predecessor Global Financial Crisis (GFC), as the similarity in the name may suggest, but its roots go back much further and it demonstrates that European bankers were working the scam long before their American counterparts woke up to the sub-prime mortgage version. Both these GFC’s were caused by conscious, fraudulent, criminal behaviour on the part of bankers seeking to maximise the bonus arrangements which short-sighted shareholders had put in place to “incentivise” them.

    These bonus arrangements paid significant sums to bankers who increased the apparent book value of the bank. If the bank increased its apparent value, then that generated an apparent profit and a percentage of that apparent profit was the basis on which real, hard cash bonuses were paid out to those who had supposedly worked so hard and so creatively to generate these profit improvements. To feather their own nests, the bankers became exquisitely creative: they created money out of thin air.

    Firstly, let us look at how this applied to the Greek GFC, which had been building up for decades. Let me emphasise that I do not consider the Greeks themselves entirely blameless for what happened. Their tax-evasion culture, excessive state ownership of very large parts of the economy, ridiculous over-manning of all government-run activities and total pandering to civil servant union demands made the country impossible to run in a financially responsible manner, irrespective of whether a left-wing or a right-wing government was in power. Hence, the only way to keep going was to borrow money to cover the current account shortfall each year. In most countries, such lending would be provided to a large extent by the domestic market, but the people with money in Greece knew damn well that the situation was structurally out of control and that the country was on a roller-coaster ride to bankruptcy, so they all kept their tax-free money stashed safely, far away from Athens.

    Each year Greek politicians went cap in hand to the banks of Paris and Frankfurt and London and Amsterdam asking for billions in loans and the banks happily lent it to them. Why would they do that? Did the bankers not know what all the rich people in Greece knew very well? Of course, the bankers knew that. They knew exactly what was going on, but their bonuses came first. By lending another billion euro to Greece they could put an additional five to ten percent of that amount into the books as an apparent asset increase because they would be earning interest. Their personal bonus might only be a measly one percent of that amount, but 1% of 5% of one billion is a very healthy €500,000: not bad for a pleasant afternoon chat with the Greek Minister of Finance! Even funnier, the lower Greece’s credit rating went, the higher the interest rates demanded for the new loans and the larger the bonuses produced by approving them. That is what the Americans call a win-win situation. To top it off, for the larger loans sought in Paris and Frankfurt, there was an added political dimension, since the armaments industries were involved. The Greek Minister came asking for, say, €5 billion and was told “We are willing to lend you €10 billion on the condition that you spend €5 billion of it on purchasing our tanks, jet fighters, machine guns, whatever, to defend yourself against that aggressive, neighbouring, NATO ally, Turkey.”

    And so, year in, year out, the loans accumulated and the bankers rubbed their hands in glee. The total Greek external debt went from €100 billion to €200 billion to €300 billion and finally to €400 billion before the shit hit the fan. Over a period of maybe 20 years a few hundred bankers earned themselves as much as €200 million in bonuses by throwing their bank’s money into a black Athenian hole! They knew very well what they were doing and were equally sure that they would never be held accountable for it.

    Secondly, let us look at how this same incentive bonus scheme for bankers worked in the Global GFC made in the USA. During the early years of this century, banks like Lehman Brothers and Goldman Sachs in the US were high as a kite on bonuses, but were running out of options for real asset-value increases. However, there was no government regulation of anything, a series of irresponsible presidents had ensured that, so a few of the more creative gentlemen on Wall Street decided to package various securities in a new way with a large component of sub-prime mortgages. Since these guys think big, let’s say they packaged them into $10 million chunks. So they created investment entities that had probably a fairly optimistically realistic value of $10 million at the time, since house prices were still going up and as we all well know, they never come down. Now, Fred, in the packaging department of Lehman Brothers (or was it Goldman Sachs, I forget) calls his friend Bill in investment management and says: “Hey Bill, how’s it going? Have I got a deal for you: I have this $10 million security package, AAA rated by my friends at Moody’s, which I shall sell to you for $15 million and in two weeks time I shall buy it back from you for $20 million. That way we both generate $5 million of apparent profit in our departments and you can calculate your bonus just as well as I can!” Apparently, Bill was no fool: a real banker.

    That is how the ball got rolling and it spread like an oil slick throughout the world. Probably, none of the many thousands of bankers involved had any idea how big and how bad this had got, so the ultimate collapse was a surprise. They probably thought that the majority of bankers were honest, hard-working citizens, but they themselves were just one of the few who could not resist this easy way to fund that beautiful 30-metre yacht they had seen at the last millionaire’s show.

    To summarise: tens of thousands of bankers worldwide collaborated, consciously or unconsciously, in a Ponzi scheme to create an illusion of accumulating wealth in order to pay themselves absurd bonuses in real, hard cash for fictitious profits generated in the bank’s books. These profits came from worthless pieces of paper, which the bankers sold to each other for ever-increasing amounts. The shareholders all said: “Go, go, go, this is wonderful! We get dividends and the value of our shares goes up and up.” When the bubble burst and the worthless pieces of paper were correctly revalued, hundreds of billions of euro’s worth of fictitious assets disappeared and the share values plunged. However, the bankers, to the best of my knowledge, paid not one penny of the real, hard cash bonuses back.

    All the extravagant bonus schemes for bankers are alive and well and still in place throughout the Western world. They hang, like the Sword of Damocles, over our heads. I wonder what other scams are already well underway? One I have heard about is a derivative of the sub-prime scam. A lot of the property covered by those original sub-prime mortgages has been repossessed by the banks and rented out to tenants. Those rental contracts are now being sliced and diced with other things to create securities similar to those that caused the original GFC and just as toxic. You cannot keep a good banker down!

  • The Neoliberal Legacy I bequeath to my Grandson

    Mankind was subjected to three major social disasters in the 20th century: communism, fascism and neoliberalism. The last is proving to be the worst…

    Economics is a bit like religion: it is all a matter of conjecture and opinion and things that move in mysterious ways, but with no solid scientific basis in the real world. Unfortunately, and despite its obvious shortcomings, just like religion economics has an enormous impact on the real world of human society. To be honest, I dislike economics almost as much as I dislike religion and I believe that I did an excellent job of avoiding both of them for a good half century. Again, unfortunately, ignoring something does not make it go away and since retirement I have been obsessed with both od them. As far as economics is concerned, I am obsessed in the sense that I want to try to structure and understand what had happened in my own working lifetime, while my attention was directed elsewhere. I simply want to do that for my own peace of mind. With the benefit of hindsight I think we can look back and see what has happened.

    By the end of the 1980’s, the rich, through their primary agents Reagan and Thatcher preaching neoliberalism, had decisively won the undeclared war on the working class in both the UK and US. The power of labour and the unions had been completely and irreversibly broken, while the middle class looked on bemused and apathetic, not realising that it was to be their turn next. What first brought it home to me was that after the turn of the century Barack Obama made a very telling point in his book, “The Audacity of Hope”, when he said: “In 1980, the average CEO made 42 times what an average hourly worker took home. By 2005, the ratio was 262 to 1.” A couple of years later, Sam Harris in his “Letter to a Christian Nation”, while comparing the US with Europe, said: “Consider the salaries paid to top-tier CEOs and those paid to the same firms’ average employees: in Britain it is 24:1; in France, 15:1; in Sweden, 13:1; in the US, it is 475:1.” You may dispute any of these individual numbers, but I think the order of magnitude and the trend and the message are all clear enough. The rich are making hay while the sun shines and consequently driving an ever-greater proportion of the rest of mankind under the poverty line.

    The greed of the ruling capitalist elite increases relentlessly: it is both unbounded and ever more unconstrained. This is amply demonstrated by the recent global financial crisis: tens of thousands of bankers worldwide collaborated, consciously or unconsciously, in a Ponzi scheme to create an illusion of accumulating wealth in order to pay themselves absurd bonuses in real hard cash for theoretical profits generated in the bank’s books. These bogus profits came from dubious pieces of paper, which the bankers sold to each other for ever-increasing amounts of virtual money. The shareholders all said: “Go, go, go, this is wonderful! We get dividends and the value of our shares goes up and up.” When the bubble burst and the worthless pieces of paper had to be correctly revalued, hundreds of billions of dollar’s worth of fictitious assets promptly disappeared and the shares became worthless till the governments stepped in. However, the bankers, to the best of my knowledge, paid not one penny of the real cash bonuses back. Only Madoff is suffering for all their sins: he made the inexcusable mistake of stealing real money from the rich. The shareholders I have little sympathy for: they acquiesced in putting these ridiculous bonus schemes into place, so I am inclined to think “it serves them right” were it not for the fact that a lot of them were just naïve pension fund managers who thought they were getting a good deal for their trusting, hard-working members. What happened when the government stepped in was that the rich, whose money it was that the banks managed, inflated and lost, were bailed out at the inflated value using the public purse. Through this bail out the public purse was plundered by the rich and was then empty. Hence, it has to be filled again and the poor and the sick and the weak and the old and, last but by no means least, the middle classes are required to do that through “austerity” programmes.

    This is the neoliberal capitalist legacy.

    Capitalism only serves the interests of the rich. A minority of influential economists, those who have not succumbed to the wiles of the rich (David Harvey, Nouriel Roubini, Richard Wolff, etc.), speak very convincing on this issue and point out clearly that crises are now endemic and will continue and will become more frequent and more severe. Hence, each crisis will serve to verify what an economics professor here said of the 2008 GFC: “Never has so much damage been inflicted on so many by so few in such a short space of time”. They also correctly point out that after each crisis, ownership of an ever-greater proportion of the world’s real wealth is concentrated in an ever-smaller group of the plutocratic elite: those we now label as the 1%, though they are in fact the 0.001%. This is not a problem since (courtesy of Noam Chomsky):

    The poor complain, they always do; but that’s just idle chatter.

    Our system brings rewards to all; at least to all who matter.

    The only ones who matter are the elite and those who work for them. They will decide what happens to the world. The EU and the US are both extremely wealthy: in fact, they are loaded! We are not facing an enormous debt crisis as the politicians and the pundits proclaim. Rather we have an enormous concentration-of-wealth problem. Although we are rich nations, it does not seem that way because such a large proportion of our wealth is concentrated in the hands of a tiny minority: the 1%. That 1% now owns, controls and directs both the politicians and the pundits to serve their own interests. They decide what we are to read, what we are to hear and what we are to see and thus what we are to think. They select the candidates for political office that we think we are voting for. Actually, if you take the total wealth of the US or EU and divided it by the number of households, then each household would have positive net assets of some hundreds of thousands of dollars, but the vast majority of households actually have a negative net asset value.

    How did we get to this sorry state of affairs? Unfortunately, to determine what got us into this mess, we have to go back in time to more than half a century ago.

    After the Second World War, from about 1947 until the mid-1970s, the fruits of our ever-increasing productivity were shared reasonably fairly with working people and the middle class grew significantly. As productivity rose so did the real income of the workers and their spending power enabled the expansion of the middle class. There were still plenty of rich people who earned a disproportionally large slice of the productivity harvest, but much of that excess wealth was ploughed back into the economy through the high top marginal taxation rates. Between 1947 and 1980 those rates averaged well above 70%, but went as high as 92%, on millionaire’s incomes. Much of that money was used to build the physical, medical, transportation and education infrastructures of our just and socially responsible societies. Unions were supported by public policy and workers' real wages rose steadily even after accounting for inflation. The financial industry was tightly controlled and the middle class grew like never before.

    Then something happened and it was not an act of God, nor the blind forces of technological change, nor the mysterious movements of markets. Nor did the rich become enormously smarter than before, but simply realised the simple fact that he who owns the political process can determine the rules. Subsequently, democratically elected policy makers succumbed to the siren song of neoliberal economic gurus funded by the rich and decided that deregulation and tax cuts should become the order of the day starting in the mid-1970s. Through the 1980s Ronald Reagan and Margaret Thatcher were the leading political lights driving this transition to neoliberalism. The story was that if we cut taxes on the rich and deregulated the economy, especially the financial industry, investment would dramatically increase and all incomes would rise and all would benefit. Unfortunately, as we now can see looking back, the opposite occurred. The average worker's wage in real terms stalled and even declined after the mid-1970s. The fruits of our increasing productivity were no longer shared equitably. The rich were smart enough to seize the opportunity offered to them to appropriate much more of the pie for themselves and the vastly reduced top marginal tax rates ensured they kept it. The enormous and increasing gap between our total income and the cost of production, many trillions of dollars per year, went almost entirely to the rich. The wealth of the wealthy skyrocketed, not by accident, not by electoral intent, and certainly not by any magical improvement in the productive ability of the rich, but by simple misguided economic policy, which the rich were best equipped to take advantage of. Personal material greed became the only moral principle directing the operation of the economy: “Greed is Good”.

    The process of privatisation further contributed to this dramatic shift in wealth. Privatisation is where public assets of incalculable value are sold off for a nominal amount to the wealthy backers of the politicians orchestrating the privatisation process. Most of these assets like power, water and sanitation utilities, public transport, postal services, telecoms, prisons and health care facilities were originally natural monopolies. One by one the rich are acquiring them for a song and promptly using their monopoly position to exploit their earning potential to a maximum and thus to the public’s detriment. For the public the prices go up and the service levels go down.

    By the late 1980s the unions were completely broken and the working class was defeated, leaderless and resigned to their lot. Even the political parties that labelled themselves “Labour”, no longer felt any affinity with or responsibility for the working class, since that class no longer had any clout. Hence, now the assault on the middle class could start in earnest, but could only be done by more subtle means. Breaking union strikes by brute force was no longer required, so the challenge was: how to gradually transfer the assets of the middle class to the rich without anyone getting upset enough to launch a revolution? It has taken two decades, but at least in the US it is a resounding success and is far advanced in a large part of the EU. I do not really understand how it happened, or whether it was orchestrated, or whether it was just a by-product of a number of seemingly unrelated financial trends. In any case, it culminated in the 2008 GFC.

    The 2008 GFC was a systemic fraud in which the wealthy finance capitalists stole trillions of public dollars on behalf of the rich and became wealthy themselves in the process. To my knowledge, no one was jailed for this crime, the largest theft of public money in history, except for a few directors of Icesave in Iceland. Instead, the rich are forcing working and middle class people across the globe to pay for their "crisis" through punitive "austerity" programs that are robbing pension funds, gutting public services and repealing human rights. All residual services for public health, public education, public transport and public culture are to be curtailed and ultimately eliminated.

    The fallout from the 2008 GFC is on going, but let us look at what has happened to the middle class in this process. In the beginning, the late 1980s, when the working class had been completely subdued, the middle class was doing very well. It had noticed, but hardly suffered from the destruction of the working class and smugly assumed that their financial position was much stronger and unassailable. The normal and overwhelmingly common middle class household was a two-parent, 3-4 child unit in which one parent (usually Dad) worked a full-time job and earned enough to support the unit. He had reasonable job security, salary raises more than keeping pace with inflation, company subsidised health insurance coverage for the family, free public education for the kids, and a promising pension fund for retirement.

    Fast-forward 20 years to our post-2008 GFC world: that same middle class family is living on another planet. Now that normal household has become a two-parent, 1-2 child unit in which both parents must work to make ends meet. The unit cannot survive on one full-time salary, so both must work. In general, that means having to run two cars and pay for child minding care, which eats up a large chunk of the second income. Job security has become a long-lost dream; for health insurance you are ever increasingly on your own and medical costs have escalated enormously; free education has been severely curtailed and tertiary education is prohibitively expensive; and the status of one’s pension entitlements are a matter of conjecture. Twenty years previously the normal middle class household had a positive net asset value of one to two years of net income. Today it has a negative net asset value: a net debt of two or more years of net income. Many if not most households are maxed out on their mortgages, on their credit card debts, on their car purchase payments and on their student loans. If anything goes wrong, such as one parent losing his/her job, then bankruptcy is staring them in the face. Personal bankruptcies have skyrocketed.

    So where has all that middle class wealth gone: I shall only give you one guess. The 1%, who back then were mere millionaires, are now all billionaires. Their net asset value has increased by at least three orders of magnitude.

    I was never one to believe in conspiracy theories and I still refuse to give the rich credit for having successfully conspired together for 40 years to get where they currently are. I fear that they simply grasped the opportunities presented to them by the naïve incompetence of the 99%: i.e. unknowingly and unwittingly, we handed it to them on a plate. I consider this the biggest failure of my generation. We developed nuclear power, computers, television, telecoms, Internet, mass air travel, space exploration, nanotechnology, genetic engineering and cosmology, but we failed to notice that behind our backs someone was stealing our grandchildren’s lunch…

    This is the neoliberal legacy I leave my grandson and I am not proud of it: sorry Ryan…

  • Islam is NOT a Threat

    Although I have an extreme revulsion for Islam, after much reflection I have ceased to believe that it is a credible threat to the civilised Western world for the foreseeable future. The religion called Islam was concocted 1400 years ago and its message is unchanged and unchanging, set in the primitive morality of the 6th century, goat-herding, Semitic tribes inhabiting the Arabian Peninsula. Its primary goal has not been achieved. That goal is to subject us all, the whole planet, to the rule of Islamic Sharia law. The Muslims have spent 1400 years trying to do this and they have failed dismally. My contention is that they are less able to achieve anything today than they were at many times in the past 14 centuries.


    Firstly, it seems obvious to me that Islamic societies themselves are in serious trouble. They are wracked by sectarian violence and dominated by envy, cruelty, sexual frustration and hatred. If you know anything about the situation in Afghanistan, Algeria, Bangladesh, Egypt, Eritrea, Iran, Iraq, Jordan, Lebanon, Libya, Mali, Mauritania, Morocco, Pakistan, Somalia, Sudan, Syria, Tunisia, Turkey and Yemen, then you will agree with me that they are not exactly role models for civilised societies. It’s telling to recall that only a few short years ago, Turkey was a serious candidate for membership of the EU; now it is sliding into the Islamic theocratic abyss. Only the oil-rich states of the Arabian Peninsula are doing financially well under their oppressive feudal monarchies, though stable they are not. The remote, occasionally democratic, Islamic dominions of Indonesia and Malaysia currently appear relatively stable, though they are out of sight and out of mind. It would seem that the majority of the Islamic world is at best unstable, and at worst a humanitarian disaster.

    Secondly, the world is changing and the Islamic counties are increasingly unable to deal with it. The climate is changing, the energy supply/demand picture is changing and the agricultural production balance is changing. As China and India become richer and richer, their populations demand an ever better diet: all 2.5 billion of them. They want a diet like we have in the West: three square meals a day and regular doses of high quality bovine protein plus chicken, fish and pork in between. Producing such protein takes 10-20 times as much agricultural capacity as producing simple grains for direct human consumption. At the same time the total world population is going to continue to grow to an estimated 11 billion, an increase of more than 50%, whereas global agricultural production is stagnating and will probably reduce as demand drives the switch to an increased animal protein production and climate changes hit ever harder. Thus food prices are going to escalate relentlessly. There is no way that countries like Bangladesh, Egypt, Iran, Iraq, Pakistan, etc. will be able to afford to feed their populations. Afghanistan probably will be able to do that from cocaine production.

    As shale oil/gas and clean energy production relentlessly increases, the oil-rich states of the Arabian Peninsula will see their incomes slowly dropping. Ultimately they will have to go back to herding goats and wondering where the sun goes to at night.

    Thirdly and finally, I am convinced that the basic tenets of Islam preclude Islamic societies from acquiring the ability to deal with the challenges of the modern world:

    1. The Koran contains everything one needs to know: science and technology are irrelevant. Education consists of learning to recite the Koran.
    2. Women are treated like cattle, so half their intellectual capital is wasted.
    3. Polygamy marginalises and radicalises a significant proportion of the mature male population.
    4. Islam means submission and thus the abdication of the ability to think for oneself.
    5. The daily Islamic grind of ritual prayer enforcing complete submission to the will of Allah and the yearly rituals of Ramadan and the Hadj reduce both efficiency and motivation.
    6. Muslims are told to consider this life on Earth to be of no significance other than being a prerequisite selection phase for the afterlife in Islamic Heaven/Hell. Hence, there is no point in working together to improve our lot on this planet.
    7. Muslims have a massive inferiority complex resulting from centuries of European domination, so everything that happens to them is someone else’s fault: first and foremost, the Jews.

    In summary, the Islamic world is an economic, political, cultural, social and moral disaster full of sectarian violence and hatred. It has a bleak future. Once oil revenues diminish and food prices rise, their populations will shrink significantly.


    An unavoidable result of all of the above factors will be an ever-increasing pressure on Muslims to emigrate to the West. They will try to go anywhere where there is a social security handout, but the policy of Western governments will remain restrictive on immigration of all kinds. Nevertheless, despite the obvious past failure of Islam to overrun us infidels, many people in the West are concerned about what they see as an increasing immigration of Muslims into their societies. They see this as a sort of unspoken conspiracy to do by covert means what Islam has failed to do by explicit action over the past 1400 years. However, I do not believe this to be the case, since as far as I can tell there is no structure or organisation or authority in Islam to direct such a process, other than the Koran itself. The late great Muammar Gaddafi claimed that there was an orchestrated movement for Islam to conquer Europe from within via mass immigration, but nobody took him too seriously and look how he ended up: murdered by his own people! Personally, I believe that Muslims emigrate to the West simply because Muslim societies are abject failures as outlined above. These immigrants want the hope of an orderly and prosperous future for themselves and their children in a peaceful and successful society. Unfortunately for the Muslim immigrants who make it to the West, those bringing their archaic Islamic beliefs with them bring the seeds of their own past and future failure, but most adapt within two generations to the norms of the society they have embraced.

    One of the claims of the Islamophobes is that the relatively small Islamic populations in the West will reproduce more aggressively and thus grow much faster than the indigenous Caucasian populations. The claim is that within a few generations they will outnumber us: a conquest by the superior productivity of the Islamic womb, financed nota bene by our own generous social security systems! However, some recent studies in the Netherlands definitely negate this proposition. The large Moroccan and Turkish groups here have, in two generations, reduced their birth rate down to or below the indigenous Dutch level and in their home countries the birth rate is dropping significantly as well. The following excellent Huffington Post article written by the Canadian journalist, Doug Saunders, indicates clearly that the Netherlands is not unique in this respect:

    I paraphrase the arguments of the 10 myths about Muslims here:

    1. Muslims have higher birth rates and will take over by sheer weight of numbers.

    Two generations ago, it seemed indeed as if Islamic countries were destined for out-of-control population growth. People spoke of an “Islamic fertility rate”, more than 5 children per family on average, and predicted a future of minaret spires foresting the Earth.

    Today, it is readily apparent that Islam is not connected with population growth. Just look at Iran, the world’s only Islamic theocracy, where the average family had around 7 children in the 1980s and has less than 2 today, a lower rate than France or Britain and well below the population replacement rate, which is around 2.1. Or look at the United Arab Emirates, with 1.9 children per family. Or Turkey, ruled by an elected party of devout Muslims for a decade, which now has 2.15 children per family. Or Lebanon, where, despite Hezbollah’s rise, has only 1.86 children per family, so that its population is shrinking as well. Muslim women are voting with their wombs.

    2. Immigrants from Muslim countries are going to swamp us.

    People look at the large families of many new Muslim immigrants and imagine them multiplying at exponential rates. But this is a bit of an illusion, as are many of the figures suggesting that Muslim immigrants have fertility rates higher than in their homelands. This is because most new immigrants are relatively young and have most of their children in the years immediately after their arrival. The way we calculate Total Fertility Rate, the measure of average family size, is by taking the total number of live births a woman has had and extrapolating it across her fertile life. As a result, immigrants appear to have more children than they really do.

    In reality, the family sizes of Muslim immigrant groups are converging fast with those of average Westerners. Muslims in France and Germany are now having only 2.2 children per family, barely above the national average. And while Pakistani immigrants in Britain have 3.5 children each, their British-born daughters have only 2.5. Across Europe, the difference between the Muslim and non-Muslim fertility rate has fallen from 0.7 to 0.4, and is headed toward a continent-wide convergence.

    3. Muslims will become a majority in European countries.

    In fact, we now have several large-scale projections based on population-growth trends and immigration rates which show that the Muslim populations of Europe are growing increasingly slowly and that by the middle of this century, even if immigration rates are not reduced, the proportion of Muslims in Europe will probably peak somewhere short of 10% (it is currently around 7%). By that point, Muslims will have family sizes and age profiles not that different from Europeans in general.

    4. Muslims will become a dominant group of cultural outsiders in the United States.

    Despite the hysterical rhetoric coming from Newt Gingrich, Michelle Bachmann and their ilk, Muslims in the US are not only a very tiny group, but they are also one of the most integrated groups in the country, especially if you consider that 69% of American Muslims are first-generation immigrants, and 71% of those immigrants arrived after 1990.

    There are only 2.6 million Muslims in the United States today (0.8% of the population). By 2030, that number is likely to rise to 6.2 million (because Muslims are young and fertile), at which point Muslims will be 1.7% of the population, almost as numerous as Jews and Episcopalians. Even though they’re new, American Muslims tend to be economically successful and highly educated. With 40% of them holding a college degree, they’re the second most educated group after Jews, and far more educated than Americans in general, only 29% of whom have a degree.

    5. Muslims in the West hold the same backward views as Muslims in the Middle East.

    Actually, Muslims change their cultural views dramatically when they emigrate. For example, 62% of American Muslims say that “a way can be found for the state of Israel to exist so that the rights of Palestinians are addressed”, a rate barely lower than that of average Americans (67%), and vastly ahead of the minuscule response among Middle Eastern Muslims, for whom only 20% to 40% agreed with that statement, depending on the country.

    Similarly, 39% of American Muslims and 47% of German Muslims say they tolerate homosexuality, compared to single-figure responses in most Islamic countries and those rates are rising with each immigrant generation. On these important questions, Muslim immigrants are converging with Western values fast.

    6. Muslims in America are more loyal to their faith than to their country.

    True, 49% of Americans from Muslim backgrounds say they consider themselves “Muslim first and American second” and 47% claim to attend a mosque on Friday. But you have to compare that to American Christians, 46% of whom say they identify themselves as “Christian first and American second” (that number rises to 70% among Evangelicals). And 45% of American Christians attend a church service every Sunday.

    In other words, Muslims have adopted exactly the same rate of religious observance as the people around them in their host country. We see this just as strongly in France, where 20% of those counted as Muslims are actually atheist and only 5% attend a mosque regularly, almost the same rate as French Christians attending church.

    7. Poor Muslims are flooding out of overpopulated countries into the West.

    In fact, the poorest and most overpopulated Muslim countries (Indonesia, Pakistan, Bangladesh and Egypt) are producing the least emigration and very little of it is to the West. Immigration tends to come from the countries with the lowest population-growth rates and the highest levels of sectarian violence.

    Muslims are also far from the largest immigrant group, even in countries that immediately adjoin the Islamic world. In Spain, which lies across a narrow strait from the poor Arab countries of North Africa, only 13% of immigrants are Muslim. The rest are coming primarily from Spanish-speaking countries across the Atlantic. In Britain, only 28% of immigrants are Muslim and those numbers do not seem poised to increase.

    8. Muslim immigrants are angry at the society around them.

    In fact, Muslim immigrants appear to be MORE satisfied with the world around them, and its secular institutions, than the general population. Muslim immigrants in the United States are more likely to say they are “satisfied with their lives” (84%) than average Americans are (75%) and that number rises to 90% for American-born Muslims. Even among Muslims in neighbourhoods where the community mosque has been vandalized, an increasingly frequent occurrence, fully 76% say that their community is an “excellent” or “good” place to live.

    This usually extends into pride in national institutions. For example, 83% of British Muslims say they are “proud to be a British citizen,” versus only 79% of Britons themselves and only 31% of Muslims agree that “Britain’s best days are behind her,” versus 45% of Britons in general.

    9. Muslims in the West applaud terrorist violence.

    While it might seem chilling to learn that 8% of American Muslims feel that violence against civilian targets is “often or sometimes justified” if the cause is right, you have to compare that to the response given by non-Muslim Americans, 24% of whom said that such attacks are “often or sometimes justified.”

    This is reflected in most major surveys. When a large-scale survey asked if “attacks on civilians are morally justified”, 1% of the French public, 1% of the German public and 3% of the British public answered yes. Among Muslims, the responses were 2%, 0.5%, and 2% respectively. Asked if it is “justifiable to use violence for a noble cause”, 7% of the French public agreed, along with 8% of French Muslims; 10% of the German public and fewer than 2% of German Muslims; 10% of the British public and 8% of British Muslims. This may well be because more than 90% of the victims of Islamic terrorism are Muslims themselves.

    10. UK Muslim women are so fertile that the most common baby name is now Mohammed.

    This is true, but it does not mean what you think it means. In 2010, if you combined all 12 spelling variants of the Islamic prophet’s name, “Mohammed” was more popular than any other name given to new babies. But that’s more a consequence of naming trends than anything else. In a great many Muslim cultures, ALL male babies are given “Mohammed” as an official first name. But among many Westerners, especially white Anglo-Saxons, black Christians and atheists, there has been an explosion in exotic and unorthodox baby names. As of 2011, these groups are 50% more likely than they were a generation ago to give their children uncommon baby names. As a result, Mohammed manages to reach the Number 1 spot without being at all common. Babies named after the Islamic prophet made up only 1% of British newborns in 2010.

    Gapminder ( statistics also confirm very convincingly that the birth rates in the vast majority of Islamic countries have plummeted over the past 50 years. In the four most populous Islamic countries, Bangladesh, Egypt, Indonesia and Pakistan, which together account for nearly half of the world’s Muslims, they have dropped from 6+ live births/woman down to an average of 2.6 live births/woman since the early 1960’s and the trend continues downwards. Most Islamic countries are now down around replacement level birth rates and many are below replacement level.


    Taking all the above into consideration, I shall continue to participate in the exchanges on the threat posed by Islam, since Islam is evil and the exchanges are fun, but I shall not take it all too seriously…

  • Our Universe

    Recently I followed a course on Cosmology at our local university, the VU in Amsterdam, titled 'The Big Questions about the Universe'. This course was very competently taught by an enthusiastic and knowledgeable Ir. Wim Lintsen and, although approached from a philosophical point of view using as a guide Paul Davies' book 'The Goldilocks Enigma', it was a very thorough survey of how our understanding of the universe has developed since Newton and where we stand today. It showed the interaction between theory and observation that got us to the current position of an inflationary universe, in which what we thought we could see in terms of matter and energy turns out to be only about 4% of what is now thought to be out there.

    Putting things in perspective

    Orbiting around one inconspicuous star on the remote edge of one of the spiral arms of the Milky Way galaxy, which is a perfectly ordinary and unremarkable galaxy consisting of a few hundred billion stars, is our little planet Earth. As Douglas Adams put it in 'The Hitchhiker?s Guide to the Galaxy': "Far out in the uncharted backwaters of the unfashionable end of the Western Spiral arm of our Galaxy lies a small unregarded yellow sun. Orbiting this at a distance of roughly ninety-eight million miles is an utterly insignificant little blue-green planet whose ape-descended life forms are so amazingly primitive that..." they think this universe was created specially for them.

    This Milky Way of ours is one of the hundreds of billions of galaxies that populate the observable universe as seen by the Hubble telescope. The universe is an extremely large and daunting thing: our planet is a totally insignificant, miniscule speck of dust lost in a virtual infinity of seemingly endless space. Our observable universe, i.e. what we can see out to the event horizon, has a radius of nearly 14 billion light-years. That is only a fraction of the theoretical whole, about which there are competing theories. Our observable universe alone is estimated to contain about 400 billion (4*10^11) galaxies, each with about, on average, 100 billion stars, and with a total mass of around 10^50 tons created by the big bang, whatever that was. Hence, there are at least ten billion trillion, 10^22, solar systems out there, each one with zero to maybe dozens of planets, undoubtedly some like ours. To give you some feel for the magnitude of that number, there are more solar systems out there in the universe than there are grains of sand on all the beaches on Earth. However, we think our solar system is special, but only because we happen to live in it. Personally, I see no reason not to expect that there are millions if not billions of other planets where intelligent life has evolved out there in that enormous vastness.

    After we got rid of the constraining influence of god during the Enlightenment, the universe was considered by the scientific community to be static, infinite and eternal in both past and future. It consisted of our Milky Way galaxy only, simply obeying the laws of Newtonian mechanics, lost in an infinite, endless sea of completely empty space. Everything was relative, including the speed of light.

    Then along came Einstein and the universe remained static and eternal, but became finite in size yet unbounded. Everything was relative, except the speed of light.

    Then along came Hubble and the discovery of the CMB (Cosmic Microwave Background) and the universe became dynamic and expanding at a rate that should be slowing down due to gravity, finite but unbounded, had come into being at time zero some 14 billion years ago in a big bang and was thus only eternal in the future. Even worse, it was populated by an untold number of galaxies and there was nothing special about our Milky Way.

    Then along came Schmidt and Perlmutter and the universe became dynamic and expanding at an accelerating rate due to dark energy, finite or infinite, we are still not sure, had come into being at time zero in a big bang, thus only eternal in the future, and (probably) containing some 20 times more matter and energy than we had previously detected (i.e. dark matter and dark energy make up 96% of the contents of our universe and we do not know what they are, but we can see some of the effects they have). All this means we have had three complete revolutions to our view of the universe inside a century and if you think it stops here because we now have it right, then I would bet that you are in for a disappointment.

    From whence we came

    Whatever the so-called big bang was, it was not an explosion in any form that our senses could comprehend, since there was no space to explode into. One could say that in the beginning there was and probably still is an infinite, dimensionless sea of nothing. A fluctuation in the sea of nothing, which occurred at no time since the sea is outside of time, manifested itself as something we call a big bang leading to the creation of our four dimensional universe and then time began, but only in our universe.

    The laws of nature were embedded in this universe at its creation. That there are other self-consistent sets of natural laws possible, I do not doubt, but we shall never experience them. Nor can we currently determine whether there are other universes with suitable sets of laws that permit the evolution of intelligent beings, but I suspect that there very well may be.

    Our destiny

    Ultimately, as currently envisaged, but many, many billions of years from now, when matter density has become so low that star formation has ceased and the last stars have burned out, our universe will become an attenuated, cold, dark, lifeless, four dimensional sea of empty space with occasional bits of long dead stars and other debris floating in it. It will get bigger and bigger and emptier and emptier and colder and colder forever: it will suffer entropy's heat death.

    Long before that time, a few billion years from now, the big bang and the structure of the universe as we see it will have been obscured. Due to inflation, a billion years from now an observer on Earth will see the remote galaxies blinking out, one by one, as their rate of separation from us exceeds the speed of light. Eventually, the observer will only be able to see the 30+ gravitationally bound galaxies of our own local group. All other groups will have disappeared beyond our event horizon due to the accelerating expansion of space. The same will apply to any possible inhabitants of other galaxies and any science arising from then on will conclude that the universe consists solely of this one group of galaxies hanging inexplicably in an infinite sea of empty space. They probably could not determine that there were other groups or that there had been a big bang or that space was expanding. They could speculate, of course, but they could probably never observe anything that could confirm or disprove the wildest of speculations.

    Down to Earth

    Many look at the universe and marvel that it is ideal for creating life, but I disagree. An overwhelmingly vast majority of the universe is completely inhospitable to life. Not only that, but in this one place that we know for sure that it came to be, on Earth, it took four billion years of evolution to get from a bacteria to us.

    A universe that is at least 28 billion light-years across and contains ten billion trillion solar systems and took nearly 10 billion years to get the basic building blocks in place to make the first bacteria at one location does not impress me as a candidate for the title of being a bio-friendly place!

    The surface of our planet could be said to be a bio-friendly place now, but go up ten kilometres from that surface and from there on to eternity in all directions life is most unwelcome. Even on our planet?s surface, 99.9% of all species that ever evolved and flourished are now extinct: this supposedly bio-friendly nature of ours killed them all off!

    The big questions

    What caused the big bang? Did it happen only once? My answer: I have no idea, but it seems rather large for a mere quantum mechanical fluctuation. However, life is full of things that happen only once, so why not this universe? On the other hand, universes may be being created all the time.

    What happened before the big bang? My answer: probably time did not exist, so there was no before. It is like standing at the North Pole and asking 'Which way is north?'

    Why is there something rather than nothing? My answer: there must be something because if there were nothing, then there would be nobody to ask the question 'Why is there nothing rather than something'. (This is another variant of the anthropic principle.) Lawrence Krauss points out that there are probably an almost infinite number of possible universes with something in them that we could imagine, but only one with absolutely nothing. Hence, the latter is highly improbable and unstable.

    What is the fundamental nature of this universe? My answer: I am torn between what I call the logical universe and the random universe. My head tells me that I should hope for a logical universe where there is an ultimate scientific theory of everything (a GUT) from which we can derive everything else; from which we can derive everything from quantum mechanics to relativity, and which clarifies why the constants of nature, c, G and h, are as they are and how they are inter-related. It would elucidate why our universe is constructed the way it is and would also indicate whether our universe was unique or simply one entity in a multiverse.

    However, and unfortunately, my heart tells me that the universe is probably random. That means we shall never get to the bottom of it and never derive a theory of everything. We shall simply keep refining our theories, which are mere approximations within a given region to an unknowable truth; just like relativity is a better approximation to reality than Newtonian mechanics, but neither of them are true in any absolute sense. I fear that the universe is not only stranger and more complex than we think, but that it is stranger and more complex than we can possibly ever imagine. In either case, logical or random, the universe is devoid of design, devoid of intent and devoid of any goal. There are no gods, no angels, no tooth fairies, no Santa Claus, no Wizard of Oz and no Harry Potter. What you see is what you get and it is an incredible, mysterious marvel, so make the most of it and try to enjoy it while you can. The mere fact that you are here means that you are one of the very few lucky ones who came to be and who could experience this incredible wonder.

    How did life begin? My answer: we can see how the chemistry of the early Earth's oceans might have done it. A lot of research is being done in this area, so I expect we shall have confirmation within a decade or two. From what I know, several hundred million years after our planet's formation, when things had cooled down and a large part of the initial dense poisonous atmosphere had boiled away into outer space, the world became a relatively tranquil place. It had a surface predominated by oceans at well under boiling point, continents which were sterile deserts and a stable atmosphere of primarily nitrogen, carbon dioxide and water vapour, but no free oxygen. However, there was still a great deal of volcanic activity and large heat flows out from the Earth's turbulent molten core, and violent electrical storms were a permanent feature of the surface environment. With all these ingredients the oceans were a hotbed of chemical activity. They contained an incredible range and density of compounds with all conceivable combinations of hydrogen, oxygen, nitrogen, carbon, phosphorus, sulphur, sodium, etc., etc. This was the proverbial primeval soup: it was hot, it was stirred by volcanic eruptions, it was smitten by lightening and it was churning away for hundreds of millions of years. Small wonder that at some time by sheer coincidence a molecule was thrown together which could make copies of itself. Not only could it make copies of itself: it actively did. It became a mindless, purposeless, directionless, relentless replicator and evolution started. These replicators created life and are still with us today, though in a vastly more complex form: DNA.

    How did consciousness arise? My answer: we do not yet know and maybe we shall never know, but we currently disagree on the definition and nature of it anyway. We may never know, but nevertheless we shall keep looking and neuroscientists are making significant progress in analysing the workings of the brain. Of one thing I am pretty sure: consciousness is a feature arising from chemical processes in our brains and the death of the brain means the death of the consciousness. There is no such thing as a soul.

    Why does the universe appear to be fine-tuned to permit our existence as intelligent beings? My answer: was the universe fine-tuned to permit our evolution or was our evolution constrained by the way the universe happens to be? I think the latter: i.e. we are fine-tuned by evolution to fit this universe because it was the only one available.

    What is the meaning of life? My answer is: I concur with Douglas Adams that it is 42! Only human beings can give meaning to their own lives and the lives of their friends and family. Some are more eloquent than others in that endeavour and can reach bigger audiences. The hand-me-down stories of scripture, originating from the myths of primitive, goat-herding tribes who did not know where the sun went to at night, are a total waste of time. Life in general, and Homo sapiens in particular, are a trivial and irrelevant by-product of an enormous and meaningless universe.

    Why are we here? My answer: because we are the lucky ones. Of all the untold quadrillions of viable human beings that our genetic code can permit, only about one hundred billion have actually been born up till now. Hence, we should count ourselves lucky to have a life, to be able to experience the beauty of this world, to experience the joy of seeking answers to questions and to be the privileged ones who can wither away and die.

    The only alternative answer I could consider because I find it extremely amusing is that before our universe came into being there was a supernatural being, call him Allah, Horus, Shiva or the Flying Spaghetti Monster. He was floating eternally in a multi-dimensional sea of nothing and he had been wrestling with a series of questions seemingly forever: 'Where did I come from?', 'Why am I here?', 'Where am I going?', 'What purpose do I serve?', but he could find no answers. Suddenly he had a flash of inspiration: he should create a universe with a multitude of suitable places in it where intelligent beings could evolve. These beings would be confronted with the same questions and maybe one or more of them could find answers. Even if they could not derive any answers, watching their antics would be a great relief from the boredom of being an eternal, omnipotent being with nothing else to do but contemplate his endless solitude. These beings would be like pets and help take his mind off the nagging fear of having a totally meaningless existence.

    In conclusion

    Science and philosophy are about asking questions that may never be answered; religion is about stating answers that may never be questioned.

    Personally, I have no problem with questions, only with answers. I have no problem with the questions to which we currently have no answers and I expect that mankind will never know the answers to many of the fundamental questions. It would be terrible if all questions were answered: what would there be left to do?

  • The Black Holocaust?

    Earlier this year, 2013, we celebrated the fact that it was 150 years since the abolition of slavery in the Netherlands. That having occurred thus in 1863, the Netherlands was neither the first (that was France, just after the French Revolution in 1794), nor the last European country to formally abolish slavery in all its dominions. In many cases, slavery continued in a disguised form even after these abolitions.

    Slavery was endemic in all parts of the world with settled populations from the dawn of human societies about 10,000 years ago. Before that, in the small, nomadic, hunter-gatherer groups, which spread out from Africa over the prior 50,000 years, it had been rare since it requires a stratification of the society. It was first formally documented in the Code of Hammurabi from Babylon around 1760 BCE. It is amazing to discover that even as late as the early 19th century three-quarters of the world’s population were trapped in slavery or serfdom, a condition only marginally less rigorous.

    The specific case of black slaves shipped across the Atlantic to the Americas arose during the 15th century and lasted for about 400 years. By around the middle of the 19th century most European countries had abolished slavery. During those 4 centuries of shipping black slaves to the Americas, it is estimated that about 10 million survived the trip and at least that number died on the way. They died during the forced march to the coast with their captors (mostly other blacks from a rival tribe), died in the dreadful dungeons where they were kept by whatever Europeans they had been sold to, and died in the diabolical conditions on the slave ships which took a few to several months to get to their American destination. Their deaths were merely commercial inconveniences, since they were not considered to be human beings any more than the survivors. Starting with the Portuguese, Spanish and Dutch, the slave trade reached its peak with the global domination of the British Empire in the 18th century.

    Modern Europeans would prefer not to be reminded of this shameful aspect of their past.

    As part of the Dutch 150-year celebration activities, a local writer who is also a historian and an economist and most probably a descendent of slaves taken to the Dutch colony of Surinam, was asked to write an opinion piece. Newspapers declined to publish the article he produced, as being too controversial and I can understand why: it has too much truth in it. It was written by Sandew Hira and titled “A different view of slavery”. Here it is, creatively (?) translated from the Dutch:

    Do you think you are a reasonable person? Are you a supporter of freedom of speech? Do you think that lies should be exposed? After reading this article think again.

    Why? Simply because the discussion here in the Netherlands about slavery becomes very emotional whenever the black community voices the unwelcome and unpleasant message: for centuries the Dutch were guilty of perpetrating a crime against humanity. Even in schoolbooks the lies abound denying this crime. Let us look at a few examples.

    If a black man steals a bottle of milk in a shop then he is called a thief. If Europeans steal gold and silver from Native Americans then they are called explorers. Should we now consider the blacks who steal to be explorers or should we consider the Europeans who steal to be thieves?

    In schoolbooks the invasion and conquest of the Netherlands by the Germans is called an occupation, but the invasion and conquest of the Americas by the Europeans is called a discovery. Should we now consider the Germans to be the discoverers of the Netherlands or the Europeans to be the occupiers of the Americas?

    Slavery, the Black Holocaust, destroyed 200-400 million black lives. The Jewish Holocaust cost 6 million Jewish lives. The Black Holocaust lasted four centuries. The Jewish Holocaust lasted five years. Why do schoolbooks spend so much time on the Jewish Holocaust and almost none on the Black Holocaust? Black people have their own perspective on the issue of slavery. From their perspective, the Black Holocaust is a much greater crime than the Jewish Holocaust. They consider Europeans to be in denial of the atrocious role they played.

    And now to the crunch, what do you think of the unspeakable: reparations? Let us say that someone attacks your house, beats you into submission, steals your possessions, rapes your wife and daughters and forces you to work for him for the rest of your life in exchange for nothing. With your possessions and labour he can build his own house and become rich. Later, your successors come to that house, wonder at the riches acquired from the stolen property and forced labour and ask the occupants: do we have something to discuss? Do you find your successors unreasonable? What would a civilised answer be, in your view?

    Would that answer be: “No, it all happened long ago and I had nothing to do with it!” or could it be: “Yes, I must admit that my wealth is also connected to the oppression and abuse of your ancestors. We do have something to discuss.”

    This shook me out of my complacency. Without looking into uncomfortable details, I had always felt that it all happened a long time ago and I had nothing to do with it. It was unfortunate, it was an expression of medieval Christian morality and was just one of the many injustices of the past in which the church usually played a central role. However, maybe that is too simplistic.

    One of my guiding principles has always been that the sins of the father should not be visited on the children, but nor should the benefits from his ill-gotten gains. Five generations have passed since the end of slavery and whatever gains there were from it accrued to some, but not to all Europeans and have become dispersed. Also, I believe that our current wealth is more due to our scientific, technological and organisational ability and the efficiency of our current criminal activities than to the proceeds from our past crime of slavery. Consider also that for all of the time that the North Atlantic slave trade was operating, the vast majority of Europeans themselves were doomed to be oppressed serfs living in abject poverty. Only the mercantile and aristocratic elite benefitted and trickle-down economics did not work any better under feudalism than it does under capitalism, i.e. not at all…

    Another aspect to consider is the state of play with the Africans who were not taken as slaves. I suspect that the descendents of African slaves in the Americas have now, on average, a higher standard of living than those Africans left behind to fend for themselves in Africa itself. However, one could argue that the lower living standard in Africa now is also the fault of Europeans who colonised that continent and looted its natural resources right through to the middle of the 20th century. Moreover, that looting is something we are still doing in the post-colonial era, but from a safe distance.

    Finally, I would ask: what has already been discussed in the preceding century and a half? What has already been paid?

    Hence, I would reluctantly agree we have something to discuss, but have no idea where this discussion will take us. Maybe our current financial elite should start by offering an optional, return ticket to all full-blooded descendents of black slaves to fly back to where they believe they came from? Which brings us to a practical difficulty: what do we do with half-breeds, quarter-breeds, one-eighth-breeds and so on? Who can prove who is exactly what on this binary scale?

    Fortunately, there are a lot of people in the world more knowledgeable, intelligent and eloquent than I am, so I shall have to trust this thorny issue to their capable hands.

  • Financial Merry-Go-Rounds

    Have you ever wondered where all the money comes from that our governments have to borrow to make good the budget deficits, which they claim to be reducing, but never do? The money comes from a financial merry-go-round (carrousel to my continental friends) run by the world's elite.

    For the first 20 years of my working life I was a software technician enjoying the intellectual challenge of developing systems for the travel industry. Then I went into a management role in a consulting company created by my former employer to exploit that expertise, since there was a worldwide shortage in this leading edge field. Hence, I came to have involvement with sales and marketing and finance: it was in that role that I first came across the commercial construction of a merry-go-round. For several years in the early 1990's two of my customers were the UK based Galileo and the French based SNCF. The scarce expertise that both these customers needed for the similar major system implementations they had embarked on resided in a small (a few hundred) group of internationally mobile young people coming primarily from Australia, Canada, Ireland, Italy, the Netherlands, New Zealand, Switzerland, the UK and the US. In our business dealings we kept the two customers separate, but we had people working for each customer who knew each other. It was a small world. Also, we were one of several different consulting companies involved in each customer. After a couple of years, when staff turnover at both installations seemed to have become abnormally high, purely by accident we found out one of the reasons why.

    Two Irish friends, one of whom, let's call him Pat, worked for us at Galileo and the other, let's call him Sean, worked for us at SNCF, had a bright idea. Each set up a company, Pat Ltd and Sean Ltd. Pat Ltd got himself approved as a supplier to SNCF and Sean Ltd got himself approved as a supplier to Galileo. When engaged in his normal consulting work, Pat actively solicited his colleagues, Galileo employees mostly, to resign and go to work for him at SNCF and on the other side of the channel Sean actively solicited his colleagues at SNCF to resign and go and work for him at Galileo. Thus they created each others market and pooled and shared the proceeds. This is a merry-go-round and these two guys only got away with it for a couple of years. It involves abusing your position in two parts of a marketplace to reinforce your overall profit gain from each one: a positive feedback loop!

    Now how does this work with national budgets? Firstly, practically all countries run deficits not because they spend too much, though it may often be true that they work inefficiently and do waste some money, but primarily because they collect too little tax revenue. Since the advent of neoliberalism tax revenues from multi-national corporations and the rich have dropped dramatically, whereas in the same period the proportion of the world's total earnings and wealth accumulating to those entities has increased dramatically. With diligent use of tax evasion mechanisms, including the Dutch Sandwich described in another post on this blog, and stashing everything away in offshore tax havens like the Cayman Islands, corporations plus their owners and operators pay little effective tax. All major corporations plus all minor ones operating internationally do this. For instance, in the US before neoliberalism, corporate taxes accounted for 40 cents of every tax dollar collected; it is now 10 cents of every dollar. The resulting excessive profits are kept partially as retained earnings plus paid out in creative, (often) tax-free, benefit packages to the senior management and shareholders. This also ensures that the corporations share prices stay unrealistically high. Hence, every year trillions of dollars not paid in tax accumulate in tax havens and the banks administering this enormous windfall lend it to national governments to finance their budget deficits resulting from that very same tax evasion process. Now here comes the added value of this enormous merry-go-round: the interest on those loans is set by the credit rating agencies and banks who are in turn owned and directed by whom? You guessed it, I think, they are owned and directed and working in the sole interest of the elite whose money it has all become.

    This is a vicious circle that has been spiralling out of control for over three decades. It has made billionaires out of millionaires and will soon make them trillionaires, while the remaining 7+ billion of the world's population are flat out just trying to keep up with the cost of living. I wonder how much longer it can all go on for?

  • No Conquest via the Womb?

    Islamophobia is an oxymoron. A phobia is an irrational fear of something, but a fear of Islam is entirely rational. A fear of Islam is a real and genuine concern that, as a political ideology, it poses a serious threat to the secular, democratic societies of the West. I share that concern very deeply, but feel compelled to look at facts when evaluating my prejudices.

    Despite the obvious past failure of Islam to overrun us infidels, many in the West are concerned about the increasing immigration of Muslims into their societies. They see this as a sort of unspoken conspiracy to do by covert means what Islam has failed to do by explicit action over the past 1400 years. However, I do not believe this to be the case, since as far as I can tell there is no structure or organisation or authority in Islam to direct such a process, other than the self-contradictory Koran itself. The late Muammar Gaddafi claimed that there was a movement for Islam to conquer Europe from within via mass immigration, but nobody took him too seriously. Personally, I believe that Muslims emigrate to the West simply because most Muslim societies are failures! These immigrants want the hope of a peaceful and prosperous future for themselves and their children in a successful society. The Islamic world is an economic, political, cultural, social and moral disaster full of sectarian violence and hatred. It has a bleak future.

    One of the claims of the Islamophobes is that the relatively small Islamic populations in the West will reproduce more aggressively and thus grow much faster than the indigenous Caucasian populations. The claim is that within a few generations they will outnumber us: a conquest by the superior productivity of the Islamic womb, financed nota bene by our own generous social security systems! However, some recent studies in the Netherlands seem to negate this proposition. The Dutch are very good at registering things, when allowed, and thus there is a wealth of data awaiting analysis. It is all publicly available on the web site of the Dutch Central Statistics Office (CBS.NL). One such analysis recently done concerns the behaviour of women with varying ethnic backgrounds who are of childbearing age.

    The two largest Islamic immigrant groups in the Netherlands, each representing well over 2% of the total population, are Turks and Moroccans. In total, Muslims represent just under 6% of the Dutch population, so Turks and Moroccans dominate. These people, the first generation, primarily mature men, some married, some not, came initially to the Netherlands as migrant workers in the second half of the 1960’s. They were invariably poorly educated, unskilled labourers from remote rural areas. The wives they brought with them or acquired later from their home countries were equally uneducated and subservient and gave birth to many children, as was common in the regions they grew up in. As a result of Dutch fact-gathering diligence, good data on them and their successors is available. This was true even though the Dutch assumed these migrants were just here to work and that after a decade or two they would take their savings and go back to where they came from. Contrary to expectations, the vast majority of them stayed put, even though the economic crises of the 1970’s and 1980’s made a large proportion of them both unemployed and unemployable. They chose to stay in the Netherlands with their families on social security benefits rather than returning to the uncertainty of their poorer home countries, which proves to me that uneducated they well may be, but stupid they certainly are not.

    Thus for the subsequent generation of Turks and Moroccans we also have good statistics. That second generation is now in its 40's and 50's, so has probably completed its childbearing period. In terms of the number of children produced, the state of play as of 2010 was:

    • First generation Turkish women produced 2.53 children/women, but the second generation only produced 1.69!

    • First generation Moroccan women produced 3.50 children/women, but the second generation only produced 2.04!

    In 2010 the indigenous Caucasian Dutch birth rate was 1.81. Hence, in one generation Turkish women have managed to curb their reproductive rate to a level under that of native Dutch women and the Moroccan women are hard on their heels to achieve the same status…

    What is even more encouraging on the global front is that in Turkey itself, the women have reduced their birth rate to 2.21 and in Morocco they have achieved a reduction to 2.15.

    I find this an extremely encouraging trend, but the Islamophobes will have to adjust their propaganda.

  • Dubai: The Perfect Bubble

    In April 2013 I visited Dubai for the first time in more than a decade. This time it was for pleasure, whereas on all previous occasions it had been for business. Since the late 1980’s I had been to Dubai for a couple of days on business every 3 to 5 years and every time I returned there I noticed that the city seemed to have doubled in size. However, it was quite small in the late 1980’s, so a few doublings did not make all that much difference, but another few doublings since the turn of the century most definitely have. Dubai is now an incredible, vibrant, chic, dynamic, cosmopolitan city of more than two million inhabitants, of which less than 15% are the original Arabs of the region. It oozes wealth and is inundated with temporary visitors: those on holiday, those in transit and those on business. It is claimed that in 2012 Dubai had in excess of one million visitors staying overnight every single day of the year! Given how unbearable the summer there in the Gulf is, with temperatures up to 50 degrees C, that would seem like a miracle. Anyway, there is an amazing variety of good quality restaurants and cafes featuring every possible cuisine on the planet to service these hordes of visitors. They are not cheap, but also not excessively priced, and you need to know where to go if you want a glass of wine with your lunch or dinner. A lovely place to spend a short week!

    It is a common misconception that Dubai’s current excessive wealth comes from oil, as is the case with all other rich nations on the Arabian Peninsula, but that is not true. Dubai’s oil reserves were relatively small and the majority was exploited and depleted during the last three decades of the 20th century. Currently, only a small part of Dubai’s income arises from a dwindling level of oil production. However, the oil revenues generated last century were wisely used to create the infrastructure to allow the development of the construction, tourism and services industries that are the motors driving the current economic success of the place.

    Of course, because of its Islamic roots, there is an unpleasant, but politely ignored, undertone of latent aggression, cultural restriction and discrimination. Classes and discussions on cultural sensitivity make it clear to expats as to who is in charge, the restrictions on alcohol and that the things men may do to women against their will are viewed in a totally different light. Crimes, other than those inflicted on women (not real crimes, just inconveniences), are extremely rare, since the penalties are extreme. I do not recall seeing a single policeman the whole time I was there, but maybe they were all driving around in their Lamborghinis: thus moving so fast I could not spot them. We shall return to this subject later.

    Primarily, however, I would like to examine Dubai as a financial bubble. In our (limited) experience, all bubbles burst, sooner or later. They burst because the funds fuelling them run out or get diverted elsewhere. We have had many excellent examples of bursting bubbles this century ranging from the dotcom bubble to the housing bubbles (bursting in the US, Spain, the Netherlands, to name but a few) to the global financial crises, not to mention the Greek and Cypriot Ponzi schemes. However, Dubai only suffered a minor hiccough for a couple of years from 2008 and is now back to all systems go and the sky is the limit. Why is that the case when the rest of the world is still wallowing in debt, austerity and doom and gloom?

    Dubai is primarily about construction. In the past decade an incredible parade of ambitious, superbly conceived, scrupulously researched, state of the art projects have been launched, and many completed. They explicitly went after many world records, such as the best hotel in the world, the biggest artificial island in the world, the biggest shopping mall in the world, the tallest building in the world, the most beautiful fountain in the world, etc. That is why Dubai has a native population of only 300,000 Arabs supplemented by nearly 2 million expats who are employed to realise the dream. Each one of these projects costs anywhere from a few billion to many tens of billions of dollars and most of them were launched since I was previously in Dubai just after the turn of the century:

    • The Palm Jumeirah
    • The Palm Jebel Ali
    • The Palm Deira
    • The World
    • The Universe
    • Downtown Business District
    • Burj Al Arab
    • Dubai Marina
    • Burj Khalifa

    See Wikipedia for much more interesting stuff on these wondrous projects, including the credentials of the local boss:

    This ruler is a shining example of how education is irrelevant if you have a modicum of talent and the good fortune to be born into the right family!

    At the moment, I would only like to say a few words about the projects I visited on this trip. Firstly, we were staying with friends in the Burj Khalifa complex, which was opened in 2010. The tower itself, the world’s tallest building still, is but one part of the whole. The whole includes the Dubai Mall, 18 kilometres of shopping delight (or in my case drudgery) with an impressive aquarium, and the Dubai Fountain, which is exquisite, plus 9 hotels, 22 cinemas, more than one hundred restaurants and cafes and 30,000 “homes”. As far as we could tell from the Burj Khalifa observation deck on the 124th floor, the homes were all apartments, mostly high-rise. The Burj Khalifa building itself is mixed use (hotel, apartments, offices) and can house up to 35,000 people. Where we stayed was on the top floor of a seven-storey building combining a parking garage, offices and apartments with a communal swimming pool on the fifth floor. It was a lovely, quiet, roomy, well-appointed, 2-bed/2-bath apartment with a large balcony: very pleasant.

    Secondly, the Palm Jumeirah we toured around mostly by car, it being the only Palm nearing completion. The whole structure is there and the vast majority of the hotels, parks, villas and apartment blocks are ready. In Dubai they say that the majority are occupied, but that only means that someone has purchased them from the developer. There are 28 hotels, in excess of 4000 luxury villas and tens of thousands of apartments. I could not find any conclusive figures on what it had cost, somewhere between $12 and $54 billion various articles claimed, nor could I find confirmation on the claim that it is sinking.

    Thirdly, we wandered around the Dubai Marina, which is pleasant enough along the pedestrian walks of the waterfront lined with boutiques and cafes, but as a place to live would seem a horrifying monstrosity: a bit like large parts of Manhattan. Apparently, it will ultimately boast 100,000 “homes”, most of them in 50+ storey apartment blocks with not much more than 10 metres between them, clustered around the yacht harbour, which has room for a few hundred boats. It currently claims to have a population that is predominantly Western European, but it was the most uninspiring part of Dubai that I saw.

    All these projects are bringing homes and offices onto the market at the rate of, I would guess, a few tens of thousands per year. Who is to live and work in these places? It seems to me that it can only be those committed to earning a good wage from completing the current projects and constructing the subsequent ones, plus those servicing the infrastructure to permit it all to function. But these people, the expats, in general only stay for a limited number of years and mostly do not purchase property. So now we come to the crux of the matter: who are the purchasers. If a local developer puts some tens of billions of dollars into building a Palm, money readily obtainable from the banks and government on easy terms (since the developer himself and the banks are appendages of the same government), then he must be expecting to sell the resulting homes and offices for much more than that. So, who buys all this stuff and rents it out to the expats busy building the next round of stuff?

    Dubai is a cash oriented culture. Paying a restaurant bill or a shop purchase elicits surprise if you present a credit or bankcard. Arriving at a bank to open an account with a suitcase full of cash is perfectly normal. Buying a villa on the Palm with a large suitcase, containing some millions in $100 bills, is business as usual. Buying a whole floor of apartments with a suitcase full of €500 notes is a sign of the times. Of the more than one million visitors arriving every week, some small percentage arrive with such suitcases and undoubtedly the vast majority of that cash comes from highly profitable business operations not seen by any fiscal authorities. The world’s biggest industries are drugs, prostitution and corruption. It seems that the proceeds can be taken to Dubai and laundered into property ownership, no questions asked. One friend claimed that 85% of property sales are done this way, though a newspaper article I found (Bloomberg) claimed that it was only 70% of all property purchased by foreigners that is paid for from a suitcase full of cash. These cash-rich people arrive from everywhere: from Russia, from Iran, from Pakistan, from India, from Europe, from China, you name it. Of the billions in development aid that the US and Europe have poured into various places like Iraq, Afghanistan, Gaza, etc. a significant part now resides in Dubai. I remember reading a few years ago that the Pentagon was extremely embarrassed about the fact that it could not account for a significant proportion of the billions poured into Afghanistan, but that many humble Afghan officials involved with the distribution of that money had the good fortune to acquire luxury retirement villas on the Jumeirah Palm.

    Hence, I suspect that Dubai’s economy is to a large extent a money laundering bubble. As such, it probably has a much better life expectancy than the more mundane bubbles. It is fed by the world’s great, dynamic, enterprising growth industries: drugs, prostitution and corruption. In addition, as the banking system in the West experiences ever more pressure from governments for reform and transparency, the traditional bank secrecy comes under attack, as we have seen in Switzerland and Luxembourg recently. Hence, illegal money must find new avenues to escape. Dubai is and will remain one of those avenues, as long as owning property in Dubai appears attractive and the boom continues.

    However, one thing could change this abruptly and that is Islamic militancy. If Sheikh Muhammad dies or loses his grip and those sympathetic to enforcing the less pleasant edicts of Islam gain control, then there will be a collapse in property prices, projects will go on indefinite hold and an exodus of expats will ensue. However, I think this unlikely in the short to medium term since the Sheikh has done his best for his people, provided them with health care and education, made them all rich and, to the extent that Muslims can be happy, he has done his best to make them happy. This is true particularly for the superior species, men. There are as many servant girls in Dubai as there are Arabs of both species, 300,000 thus , so the men wishing to indulge any fantasies have plenty of captive Indian, Indonesian and Filipino girls to chose from. A book has just been published in NL about the, in total, 2 million such servant girls on the whole Arabian Peninsula and it starts with those in Dubai. It came from a doctoral research project of the Law Department at the University of Amsterdam. I shall have to read it. The summary says that rape, physical abuse and exploitation (overworking and under or not paying) are the rule, not the exception.

    Another possible issue for the future is technical. Although the best of modern technology has been applied to the construction of the Dubai wonder projects, it remains to be seen whether the design, the materials, the builders and the finishers were focussed on durability. Maybe the Jumeirah Palm is sinking and many of the 50+ storey apartment blocks may suffer from construction faults in a decade or two, but so does a lot of the stuff put up in other parts of the world.

    All in all it was a fascinating five-day trip yielding much food for thought. The Emirates A380 flights from Amsterdam to Dubai and back were superb, even in tourist class, and they were on time…

  • GMO

    The current controversy about Genetically Modified Organisms (GMO) is not an issue that I have thought much about, so now is the time to order my thoughts. It would seem that most discussions on the subject are normally centred round the issue of the safety of GM food (Franken food), but that is surely only one of many issues. However, it is the one that captures media attention, so let us examine it.

    For a start we should recognise that we have, at least passively, been genetically modifying our food and domestic animals for the best part of the last ten thousand years. For most of that time, till only recently, we did it by trial and error. Human selection replaced natural selection in determining which random genetic modifications were retained and which were rejected based almost entirely on visual criteria. It was an agonizingly slow and undirected process in which we undoubtedly missed a lot of opportunities and lost a lot of valuable characteristics, particularly nutritional ones along the way. Nevertheless, it did get us from a wolf to a Chihuahua, from the aurochs to Friesian cattle and from primitive grasses to the soft red winter wheat widely used in baking delicious pastries, but in the latter case losing all the vitamin A content in the process. It was not until the green revolution of the late 1960’s that a more scientific approach to the selection and production processes, particularly for grains, became widespread. Over the subsequent few decades, that prevented millions, if not billions, of people from starving to death, but that revolution has now run its course and has run out of steam. To feed the unborn, but definitely expected, additional 2 to 3 billion people coming in the next few decades, we need a new impetus. Hopefully, thereafter the population will stabilise at around 10 billion or, even better, shrink a bit.

    Given the fact that the population is going to increase by 30 to 40 percent, but the total amount of agricultural land available on the planet is dwindling, we are caught between a rock and a hard place. Desertification, erosion and human habitation remove more land from the agricultural pool each year than is added by deforestation of the remaining fertile areas in the tropics. In addition, the climate is demonstrating an increasing instability, with wild fluctuations between extremes resulting in increasing crop failures. Oscillating between the extremes of droughts followed by floods causes not only crop failures but also the rapid deterioration of soil fertility leading to erosion. To make matters worse, food consumption patterns in the BRICS, where 3 billion people live, are shifting relentlessly towards the high-protein diets we treasure in the west. Cows, chickens, goats, pigs, sheep and all other domesticated livestock, plus the feedstock they need, require a lot more land/calorie than crops. Adding to the problem is that ethanol production for the noble task of reducing our dependence on Arab oil is yet another drain on the global food supply. To cap it off, fish stocks worldwide are also becoming seriously depleted through overfishing, pollution of the oceans and destructive trawling practices.

    Hence, I can see no other impetus available: either we accept GMO and pursue it aggressively on a global scale or we sentence billions to death from starvation in the coming decades. GMO, of course, may also fail to deal with the magnitude of this resource crunch, but as far as I can see it is the only chance we have of dealing with the situation in a humane way.

    Opposition to GM food is definitely a spoilt man’s hobby, but is supported by a large segment of the population in the west for, I think, misplaced reasons. These reasons seem to me to be:

    1. Part of a more general trend opposing rational thought and the pursuit of the scientific method. The world has become vastly more complicated within a single generation and the prevailing optimism of the 1950’s and 60’s has been replaced by the pessimism of a GFC driven 21st century. There is a gnawing fear that decline and collapse is imminent and that science and technology have brought us to this mess. What is conveniently ignored is that, without the application of science and technology, the Malthusian solution to the population problem would have operated and most of us would be long dead. Science did indeed enable us to create and sustain 7 billion people on this planet: it is unbridled human greed and the capitalist economic system that prevents there being an equitable division of the available resources. Science and only science can offer us any hope of dealing with the additional 2 to 3 billion who are on their way.

    2. Companies like Monsanto behave so abominably that anything they are involved with must be evil and dangerous. However, instead of dealing with Monsanto and friends, who own half of Congress, let’s just oppose their products, GM food, it’s easier.

    3. Ignorance of what mankind has learned and achieved over the past 400 years through the application of the scientific method, and what genetic engineering really is. Thus there is an irrational fear of the unknown.

    It is not without its dangers, but to me GMO offers nothing but promise:

    GM Crops

    We are now 30 years into the era of GM crops and, to my knowledge, nothing produced so far has been harmful to humans. The most promising recent efforts came this century with the development of golden rice, which contains vitamin A and could have a significant affect on the incidence of vitamin A deficiency, a serious problem in much of Africa and Southern Asia. Despite predictions that golden rice could help prevent millions of child deaths per year, it has not been approved for use anywhere.

    Apart from the standard arguments (see the salmon below), for crops the argument of creating a dangerous monoculture situation threatening biodiversity has been used. For me, it appears that we probably already are in a dangerous monoculture situation with or without GM crops. How dangerous it is remains to be seen, but I am sceptical.

    GM Livestock

    There are still no approved genetically modified livestock in the food chain. However, there are GM animals, such as goats, which have been engineered to produce special protein drugs for use in human medical treatment. Why does nobody object to that?

    GM Microorganisms

    Microorganisms were the first to undergo GM development. My wife, as a diabetic, appreciates one of the early successes of GM. It engineered bacteria capable of producing insulin. Insulin and a range of other human proteins are now produced for medical use by GM bacteria on a large scale. Why does nobody object to that?

    GM Poultry

    The only example of GM I have heard of here is an attempt in the UK to create GM chickens that would NOT transmit bird flu. That would be most handy and save an awful lot of vaccinations (of both chickens and people), but the research is ongoing.

    The broilers that animal rights groups are protesting about are simply cross breeds from various types of chickens fed with special diets, including growth hormones. That focussed cross breeding, with the attendant human-influenced natural selection, has been going on for about a century.

    GM Seafood

    The first test case here is a GM salmon that grows much faster and grows to become much larger than the salmon we know. The genes that cause this situation are naturally occurring in other species of fish and have been cut and spliced into the Atlantic salmon’s genome.

    There are two main arguments of those fighting against approval of this product. The first is that the meat may have long-term negative health effects in humans, even though it is chemically indistinguishable from natural salmon and contains no harmful chemical compounds. The second is that if these salmon were to escape into the wild they would out-compete all current species and wipe them out.

    The first argument lacks credibility, I feel, since our digestive systems do not absorb and use genes from whatever we eat. What we eat we break down into basic chemical building blocks and then construct our own genes and cells from those.

    The second argument, however, has merit in that it may well be true, but that is how natural selection works: when a new species out-competes the old, the old die out. That is why 99.9% of all species that ever evolved are now extinct. The inferior salmon species would join them. However, it is equally likely that the new salmon, brought up in an artificial environmental niche, where humans supply adequate feedstock and protect them from predators, could not compete in the wild where the food supply is limited and erratic and the predators have no aversion to GM food.

    See Wikipedia for a whole host of articles on this subject. I am all for GMO, but a lot of people seem to disagree with me.

  • Genesis 1, revised

    In the beginning there was the void.
    And the void was God.
    And God filled and fulfilled the void.
    And the void was without form or structure or substance.
    And the void was outside of time and immeasurable.
    And God wondered why there was a void.
    And God wondered to what purpose he existed in the void.
    And God wondered from whence he came and where he was destined to go.
    And God wondered what could be done to resolve these questions.
    And in a moment of contemplation he had a revelation.
    And he created a universe of matter and substance and energy that would exist.
    And he created time and dimensions and suitable laws to govern it for his purpose.
    And into this universe would evolve intelligent beings that would be curious.
    And those beings would ask, Why is there something rather than nothing?
    And they would ask, Why are we here and where are we going?
    And maybe they could find answers to such difficult questions.
    And maybe that could help God solve his own riddles.
    And after observing for fourteen billion years he despaired, for there was no answer.
    And to expedite the process God sent messengers to all intelligent life forms.
    And such messengers assumed the form of the dominant local species to gain acceptance.
    And spoke in their tongue, but could not divulge their true mission.
    And the messengers were treated with suspicion and many suffered an unpleasant end.
    And God became furious and frustrated and he abolished the void.
    And all that was left was the universe of matter and energy.
    And mankind looked at that universe and saw a thing of beauty.
    And mankind saw that it was good, but they did not understand why.


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