Flashback to flash forward... Fulcrumage is upon us!https://www.youtube.com/watch?v=9hW2zg-boQE
Friday, May 20, 2016
As the world stares in disbelief at the U.S. elections, what I find even more incredulous is the abject failure of anyone focusing on the elections that really matter – the Class 3 U.S. Senate races. The Republicans have 24 seats up for elections and the Democrats have 10. These are the races that matter and no one is watching. Far more impactful than the illusion of the Presidency (see my novel Coup D’Twelve) is the power wielded by the Senate and this class is one that could tackle some of modernity’s greatest challenges. Towards the top of that list is the looming financial crisis in the welfare and pension system known as Social Security.
When Social Security was enacted in 1935, the retirement age was established as 65 years of age. In 2016, this sounds like the prime of life well before death. But in 1935, life expectancy was 60 years. In other words, the majority of the working population was never supposed to live to receive any benefit as the program was set up to deal with the inconvenience of those who lived too long. In 1935, only 15% of the working population had any corporate pension plan. By 1970, this had tripled to 45%. In 1974, under the Employee Retirement Income Security Act (ERISA), what was meant to increase the private sector employer’s responsibility for retirement economic security had within it the seeds of the demise of retirement income as we know it. But more on that in a minute.
Living longer presents a host of problems for a system that was designed for working until death. With baby-boomer retirement, the nearly 3:1 ratio of workers to retirees is expected to drop to about 2:1 by 2035. The Social Security Board of Trustees reported that their cash reserves will be exhausted by 2035 with all of their programs running decreasing cash reserves since the peak in 2012. In 2000, about one quarter of the population relied on Social Security as its primary source of retirement income. Last year, that number rose to one third. Of current retirees, nearly 2/3s rely on Social Security as their primary source of income and these are the ones who will experience the coming economic shocks the hardest. To make it to cash-reserve burn out in 2035, the Social Security program must decrease benefits by as much as an estimated 21% while increasing the collection of payroll taxes. And what makes all of the statistics most troubling is that they’re all incorrect. Together with the private pensions under the ERISA programs, Social Security funds and their life-expectancy are based on a series of assumptions that do not hold.
Since the mislabeled GFC of 2007-08, the intervention of Central Banks to pump low-interest capital into the economy has allegedly averted the crisis facing the markets in the wake of reckless behavior. This intervention did have the effect of moving citizens into deeper debt linked to real estate investments. Creating massive overweight investment focus on real estate and, in so doing, extending the cash-flow requirements for workers well-beyond their pre-retirement years places compounded risks on a system that’s already fragile. The same government that creates agency loans for real estate is the same government that invests in the debt of its citizens. That same government uses these debt instruments as the “assets” that backstop the pensions and pension liabilities that are due in the future. So, when the 21% benefit reduction hits the market and defaults on real estate assets start climbing, the very “assets” that insure pensions will be illiquid at the very moment that beneficiaries are stretched to address their indebtedness. This correlated market risk is not factored into the actuarial assumptions for public or private pensions and the tsunami is already in the water rushing towards the unsuspecting public.
Historians suggest that the Greeks stored olive oil as a means of securing their economic security in times of instability or at latter stages of life. As it was relatively easy to store and could be monetized at will, olive oil was a prudent commodity to smooth the effects of changes in economic status. Government-backed real estate loans are not olive oil! When Thomas Paine suggested that the American experiment should include old-age investment support to deal with poverty in his treatise Agrarian Justice (1795), his efforts were to modernize the nearly 200 years of “Poor Laws” that had built massive social failures for those in dire straits. In 1882, piano and organ manufacturer Alfred Dolge established America’s first corporate pension program which, regrettably failed due to the failure of the business. Eighteen years later, 4 other companies joined Dolge. Despite these early efforts to recognize that rent-based labor was inadequate to sustain the life of laborers, at no point did the market or public realize that it was industrial capitalism, not end-of-life charity, that was the problem.
So, as we look forward into January 2017, we’re going to encounter a looming super-storm. We have the 115th Congress that will take its place to preside over the collapse of the Social Security paradigm as we know it. We have corporations who have been so derelict in reporting the status of their pension funding (which is under-funded and over leveraged in many instances) that the Pension Benefit Guarantee Corporation (PBGC) has doubled fines on those who don’t report adequately in a desperate effort to get more money. Bloomberg reported on what’s become known as “zombie pension plans” and the fact that financial managers are frequently abusing these funds to the detriment of their fiduciary obligations. The PBGC has been petitioned to reduce the financial obligations of pension schemes as a growing number of programs are under-funded or outright insolvent. And the PBGC itself is not clear whether it has enough money to cover its obligations without curtailing benefits. The “baby-boomer” zombie pensions are coming home to roost and those who think their retirement is covered have another think coming. We have ratification of the Trans-Pacific Partnership (TPP) which will move more corporate treasuries (and jobs) overseas well out of illiquid pension retrieval reach. And we’ll have a President who…, oh that’s right, who isn’t qualified to lead the country through any one of these storms – saying nothing about all of them descending at once.
I’m going to writing more about the critique of capitalism as it’s practiced now. Regrettably, we have not had an intervention-free experiment anywhere on earth yet so a critique of the principles is inaccessible in any date. But what we know is that by failing to measure the value of humanity’s contribution to the march of industry, many of the laborers who have been chewed up by the system are going to have serious tummy aches when they find out the promises that the capitalist system made are as soulless as… a zombie.
Monday, May 2, 2016
In 65 AD, Seneca the Younger wrote in Naturales Quaestiones Book 1 that a rainbow “requires both sun and cloud, and these opposite to each other.” Optical physics informs us that, to see a rainbow, we need to be positioned at approximately 42° from the interaction between sunlight and rain or atmospheric water droplets to perceive the refraction of light. All of which adds to the apparent mystery that took place at 6:30am AEST on Saturday, April 30 around the Spring Cove Sydney Harbor. While we were commencing our morning yoga and meditation at the Breathing Enterprise inaugural laboratory at the Manly Q Station beach, a massive rainbow appeared before the sunrise in the East! Aristotle, Seneca, and others have explained that morning rainbows are to the west and afternoon rainbows are to the East. But this rainbow, on this day, didn’t get the memo. It sprung up in a solid light column in the southern bank of the Sydney harbor opening and arched its way north to the Manly beach. The sun had yet to rise yet there it was – a gorgeous arch of brilliant colors.
During the weekend, close to 60 of us were working through an intensive process of reorienting our perspective to examine the human condition and see if there are some principles in nature that could inform and better serve humanity’s interaction in the world. This involved a number of modalities engaged to deconstruct and integrate principles that are observed in nature to examine what makes them Persistent, Generative, and Infinitely Orthogonal while most, if not all, of our human systems seem to “require” effort and conflict. Using a method recently described by Jacques Derrida in his 1967 work Of Grammatology and sympathetic to works of Gregory Bateson, Bertrand Russell and others, I sought to awaken the minds of the participants by holding tension between the words we use – the technology of language – and the essence that they seek to awaken or engage. Deconstruction is a rigorous process and it stretches everyone to the edge (and for a few, beyond) their comfort zone. In the film I produced with Kaya Finlayson, Future Dreaming, I discussed the ways in which we’ve enslaved our human experience with language. I was intrigued, throughout the weekend, how many people, in spite of the explicit critique of our terms of indenture (having to “make a living”, the “need for…”, “if I had…”), continued to use as justification for their feelings of hurt, isolation, and purposelessness the illusion that the world is somehow conspiring against them and that they’re trapped. “Yes, I’d love to do things that deeply engage my true sense of purpose but I have to go to my job to make a living…”, was a refrain that echoed in many early hours of our interaction.
When light passes through a droplet of water, the luminance of the sun is refracted and is subtly dispersed based on the wavelengths within the light. Shorter wavelengths (blue) appear to distinguish from longer wavelengths (red) and the appearance of difference emerges. Our perception of the energy of light allows us, through the introduction of a temporal variation optimizing the spectrum, to manifest a momentary appreciation for dimensions that we could not otherwise perceive. The droplet of water – a time and space machine allowing for more precise discernment in the moment – is to light what the Breathing Enterprise laboratory is to the consensus energy of our social systems. By placing the droplet or the experience into the flow of existence, we can discern the subtle components of what appears to be an indecipherable whole. But like the rainbow which affords distinction in the unseen ray of light (you don’t see the shaft of light that is refracted by the droplet) so to does the deconstruction of language-linked reality afford us to perceive components that were not otherwise available for distinction and discernment.
Many enterprises strive to be capable of delivering a consensus product or service. “Come to the workshop and you will…,” is the siren that brings people into the modality of the modern social technology of learning. When we discussed The Awakening, I was very explicit on the fact that this was meant to be a laboratory – not a workshop in the common use of the term. Quite ironically, inspite of the clarity of that message, some people came expecting what they’ve been conditioned to experience in the past: an event that is constructed to salve the pain of the consensus illusion. These people left in frustration and in varying degrees of motivation to malign and diminish. Others came having no idea what to expect and it was in the very willingness to engage in the not knowing that their insights and personal break-through moments happened.
See the funny thing about nature is that it’s wisdom is available in its observation, not in its manipulation. The rainbow on Saturday couldn’t happen yet it did. And the life-transformations – the reality that for the first time many people uncovered as a path to their lives’ purposes – which also lay as fallow prospects in the distant memory of most manifest not because of a “truth” that was shared. These came about because of the dance between light and the storm. I’m deeply honored by all of the team in the Breathing Enterprise and I’m deeply honored by all of those who came and stuck through the process to the end. For in the end, we found our true beginnings and that, my friends, is the pot-of-gold at the end of the rainbow!