Money Flow

It’s common place to assume a company’s main responsibility for its profitability is to its shareholders. To this end it aims to use the cheapest labour, the most economic means of production and maximise its sales. Its shareholders responding to market forces would otherwise, by accepting a lower share price, reduce the companies worth. It’s like if people don’t like you your bank balance will go down. The diagram arrows show the relative responsibilities to and from a company and in effect show the influence the parties have over each other. As the vast majority of workers work for companies these influences dominate our economy. It’s clear the wider society and the company’s labour force have far less economic influence than the Directors and shareholders. As economic influence directs money flow it’s obvious the flow is from right to left. Shareholders demand profit “or else” and directors become grossly overpaid. This ‘money pump’ is also leaving society and the labour force increasingly impoverished. Health, education, the police, defence and infrastructure are all under funded and mean employment practices abound. In the past unions plus labour laws and higher and more unavoidable taxation restricted these flows but with avoidable taxation and little union pressure they’re escalating as never before. This is gush up not trickle down economics. But what will be the result? With a failure to invest in health, education etc the work force will become poorly educated, unhealthy, stressed and demoralised, an army marching on an empty stomach. Companies, the hub of our economics, will become stranded. A neglected workforce, a diminishing home market and, as profits fall, deserted by shareholders. It’s not some moral duty that companies pay taxes and provide fair conditions of employment it’s enlightened self-interest. It’s also enlightened self-interest that governments preside over a vibrant economy and an equally vibrant society. 

Selling it from Under You.

It’s worth studying white America’s treatment of Native Americans. Through massacres and countless broken treaties it has reduced them from a viable widespread people with a rich heritage to an impoverished depressed rump rife with drugs and alcohol. It has gone on to treat its own lower reaches to the same fate, and all in the name of commercial viability. This morning my Face Book page is a long list of petitions against closures of social amenities, road schemes requiring heritage demolition, crisis in the NHS etc all in the name of commercial pressures and the need to monetise our social assets. Interspersed with these are items on mental health, pollution and plastic waste. The world corporate via the government is creating a similarly depressed, pointless and neglect-able rump that appears to be bringing its own misfortunes on itself. It is not, it’s being thrown out of society and left to fester because it can’t monetise its position. Councils, education, NHS, police, libraries and social amenities are under funded and ordered to monetise or be sold off. Socially it’s the equivalent of selling your essentials, bed, cooker, even food for a little cash in hand, and cash without sleep or food is of little use. Spend it and you have nothing, only the seller has even more. Thus it’s vital the government governs the actions and values of society to maintain its vitality, to not give fruitless handouts or allow its assets to be stripped by powerful corporations but to maintain its viability, integrity, environment and well-being. A government that does not maintain this fabric of society is in gross dereliction of its duty and my Face Book page gives ample evidence of this being the case. 

Heart Story.

The speaker continued. “So we continued looking for these brain like cells around the heart and stomach of other animals. Gorillas have more than quadruple that of humans, dogs triple and even cows have double that of humans. It appears human development has not only increased our ‘head’ brain it has decreased these other areas of brain like activity. What might that suggest? From centuries human societies have referred to ‘heart felt’ and ‘gut feeling’: We say them without thinking. But people often experience visceral emotion in their chest, existential hunger in their belly. We don’t consider them evidence of brain activity yet we readily accept a headache is evidence of mental stress. Surely if you feel it in your chest it must be happening there, not in the heart itself but in its surrounding brain. I say ‘brain like’ because we don’t experience these responses as the usual cognitive activity connected to our outward senses; they appear just an indescribable sensation.” The audience took the speaker’s pause to re-comfort themselves. “The quite recent revelation that we do have outposts of brain activity in these regions has thus far been a novelty, an unexpected quirk of evolution, possibly located to help the organs function. But what if those colloquial sayings are accurate? What if they are the seats of our experiencing of love and primal hunger?” The speaker paused again before closing the circle of his argument. “If so our findings suggest animals have retained a greater capacity to experience and evaluate these essentials of life where human evolution has consistently bread out that capacity in favour of our conscious head brain.” He looked around his audience. Most were proving his point, evaluating it no lower than their necks, finding it interesting, novel, worthy or not of consideration. “Can you imagine that gorillas experience life four times as intensely as you, that as you play with your dog he loves you three times more than you love him? That you’re simply no longer equipped to love him that much? Of course you have no way of knowing. Our most recent research has returned to the study of humans. Our non-invasive scanning techniques have shown a strong correlation between heart-brain volume and how people are perceived by others, self-perception having proved too unreliable. People experienced as empathic, loving with a rich joyful life are in the higher percentile where egotistical, uncaring types with a self-serving lifestyle are in the lower. I leave you to ponder the consequences of following this particular evolutionary path.”

The House Price Class of ‘75.

From 1952 to 1970 (18 yrs) UK house prices approximately doubled. That’s a year on year rise of 4%, slightly below inflation. In 1975 and ’79 there were two short periods of high inflation, 27% and 22%. In the thirty odd years since then inflation has dropped back to around 5%.

%		x7	x49 yrs	x42 yrs	x18 yrs
1.03		1.23	4.26	3.46	1.70
1.04		1.32	6.83	5.19	2.03
1.05		1.41	10.92	7.76	2.41
1.06		1.50	17.38	11.56	2.85
1.07		1.61	27.53	17.14	3.38
1.08		1.71	43.43	25.34	4.00
1.09		1.83	68.22	37.32	4.72

Compound interest is a strange beast. Little apparently insignificant percentage rises can accumulate to large multiples over time. In the table above over 49 years (‘70 – 2016) a yearly interest of 5% gives a multiple of 10.92 where a yearly interest of say 8% gives a multiple of 43.43. Anyone who’s had a mortgage will know one’s sensitivity to interest rates. Now banks don’t like high inflation, it devalues what they’ve got, so the late 70’s was a scary time for them. From the 50’s and before houses were bought and sold along with inflation. Like everything else they went up year by year like the rising cost of a new vacuum cleaner but something happened around 1980, something that wasn’t in peoples consciousness before, the thought of a house being an investment. House prices rose in line with the short periods of high inflation and ‘appeared’ to appreciate in value. It’s highly likely the banks stimulated or even invented this notion of your house as an investment because they must make the bulk of their profits from domestic mortgages and ‘owning an appreciating asset’ would make a great stimulus to their business. People would be willing to pay a greater percentage of their disposable income to move up the housing ladder. And so it was house price escalation took off. From ’72 to 2006 domestic house prices increased 18 fold from £10k to £180k. It got to the point people were earning more in bed than going to work. But every householder was proud of their home’s increase in value even though it only meant they were paying more and more to the banks in interest for the exact same mound of bricks and mortar. Where inflation was 5% house prices rose by around 8% per annum.

yrs		1972-2016	1952-70
house price multiple		18	2
house rise % pa		7.50%	4.00%

If they’d maintained those pre 70’s increases that 2016 £180k house would only cost around £40k. (In 2007 US banks would lend a domestic cat $100k if they could offload the consequences in a triple A junk bond) So in a way the 2008 crisis began in the 70’s and remains today in homelessness and the affordable homes crisis. And we’ve only got our own gullibility to blame. 

Mental Health and Cows.

For Christmas Sallymouse gave me a book, ‘The Secret Life of Cows’, knowing I have a huge soft spot for Highland Cattle. Rosemary Young knows her herd intimately, each a character with caring family relationships and friends, each relating to humans in their own way. Thirty years of stories illustrate their need for freedom, interesting things to do and eat, the relationships of a supportive group. Her herd is healthy without the need of antibiotics and their meat is health giving too, and it’s commercially viable. She describes how factory farming is profoundly unnatural and emotionally damaging to animals. They become stressed, aggressive, lethargic and depressed, prone to health issues and lameness requiring constant preventative medication. They grow slowly and their meat is less healthy. Personally I love cows because they teach me the real quality of acceptance. If one is willing to divest one’s many human imperatives quality time with a cow will provide meanings to words we would otherwise only construct in the abstract. So mental health according to my Christmas book is situational and the summation of what’s gone before. If, as seems to be, there is a human mental health crisis it is the result of our situation, of factory farming. We also have, “a need for freedom, interesting things to do and eat, the relationships of a supportive group.” Poor mental health isn’t in general caused by some personal weakness but by personal depravation; a systemic process of demoralisation. As such our health becomes prone to attack and our output becomes poor. The NHS is overstretched, there’s an urgent unmet need for counselling and productivity in the UK hasn’t increased in years. Rosemary Young could teach us a lot about running the country.