Yin and Yang of Capitalism and Communism

[chris macrae]

..YIN extreme commnunism and capitalism both fail as a system due to the same faultline - namely that the ideology biggest organsiations become vested interests of a few insiders at the top however loudly they use propaganda to claim the opposite   YANG to the extent that alumni of Adam Smith saw the freedom purpose of economicsas designing systems/futures that improve the human lot, we agree with this teaching of  .. Kenneth Boulding 1968 - Economics as a ( Systems) Science: The historical significance of capitalism is precisely a society in which exchange has become a more important source of power than threat

Jargon - entrepreneur (french between taker) originates circa 1800 from how to design a more socially productive economy after a place's peoples have found it necessary to cut off the heads of the top 0.1% who were monopolising all productive assets and rules over systems. My father Norman Macrae whose work at The Economist aimed to design better futures for all peoples chose term Entrepreneurial Revolution from 1972 to linkin his life's work on how to invest in youth of the first net generation being 10 times more oroductive, collaborative and sustainable through every community     online library of norman macrae - The Economist's Unacknowledged Giant     In the following we aim to make some observations as mathematical designers of systems measured to have expoential future impacts - we are not intentionally subcribing to any one party political view against another, nor do we wish to support any particular culture. But since anyone who pens words comes from somehere - we hope we express the view of diaspora scots. Soon after 1700, as a conseqeunce of international financial fraud, scots lost more than half of their savings. They were taken over by England and by 1850 over half had ben forced to emigrate to remain entrepreurially free and happily life rewarding. So we prefer a worldwide perspective but one that is grounded in the village of community's most urgent needs we find our families (especially our children) living through.

WHERE IS THE FUTURE OF CAPITALISM THAT FAMILIES WORLDWIDE MOST VALUE FOR CHILDREN?
The introduction of most media gives away some of the commons - especially local access to community spaces - unless specifically designed not to compound this loss of freedom.

Some apparently small media extensions - eg first to control audio taping alongside radio waves - have had terrifying first users -in this case Hitler. Another problem is caused by so-called democratic governments who sell out new media licenses to the highest bidder. From the politician's short-term electioneering point of view this revenue gain will be attractive to the populace since in the short-term it replaces need for more taxes. However a case can be made , for example, that USA sold up so much tv to commercial advertisers keeping so little public service - that the exponential consequence was the loss of whole truth integrity of public servants , the excesses of addiction, fear, image-making over real purpose,fatal conceit at the top of governance and academia,   short-term greed replacing inter-generation investment. Whether you attribute these crises in turn of millennium US system design to this or other factors, the hard working endeavours of the American people and the national system they are now stuck in are 2 very dfferent dynamics- reference how this future history played out: neurotic trillionaire survey of america's 3rd century

x 10 May 1969

 

Where can Hi-Trust Capitalism help youth replace phony capitalism

 

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. [PDF] (GABV) was founded in 2009 as an independent network www.gabv.org/wp-content/uploads/Full-Report-GABV-v9d.pdf You +1'd this publicly. Undo File Format: PDF/Adobe Acrobat Funded by The Rockefeller Foundation, Triodos Foundation, BRAC and BRAC ...... Abed (BRAC Bank), Luis Felipe Derteano (Mibanco), and Thomas Jorberg (GLS ... In all economies new external capital will be required for banks with Values ... 2012 update at 3rd norman macrae remebrance party, our chief guest of honor was sir fazle abed: in a 2 hour dilaogue his most exciting experiment of the year: cashless banking www.bkash.org   ...

Extracts from The Econmist's Unacknowledge Giants Last Articles 2008 - more at consider bangladesh THE IMPORTANCE OF DR YUNUS By Norman Macrae, Saint James, London, February 2008: UK Launch of Creating World without Poverty: Social Business & Future of Capitalism   The Nobel Peace Prize for 2006 was controversially awarded in Oslo to a "banker for the poor" in once basket case Bangladesh. Since the microcredit system pioneered by this Doctor Muhammad Yunus really has raised record millions of Bangladeshi women from the world’s direst poverty, Yunus was greeted on his recent visit to London largely by the misunderstanding Left. But as an octogenarian Free Marketer, I also had lunch with him and thrill fully to his stated aim to "harness the powers of the free market to solve the problems of poverty", and his brave belief that he can "do exactly that". This apparent appearance of a viable system of banking for the poor has important implications we had better start by examining how microcredit almost accidentally came about.   START IN A STARVING VILLAGE During Bangladeshi’s terrible famine year of 1974, Dr Yunus ( who had attained his doctorate in economics in a fairly free market American university) was back at his 1940 birthplace of Chittagong, Professor of Economics at the university there. He took a field party of his students to one of the famine threatened villages. They analysed that all 42 of the village’s small businesses (tiny farm plots and retail market stalls) was indeed going bust unless they could borrow a ridiculously tiny total $27 on reasonable terms.   First thought was to give the $27 as charity. But Yunus lectured that a social business dollar that had to be paid back from careful use in an income generating activity, was much more effective than a charity dollar which might be used only once and frittered away. All of those first 42 loans were fully repaid, and lent back, and after 9 years further experiments Yunus in 1983 founded his Grameen (which means Village) Bank. Its priority was to make loans that were desperately needed by the poor instead of the usual banking priority to make the safest loans to the rich who could provide collateral against what they happened to want to borrow.   In the next 23 years, Grameen provided $6 billion of loans to poor people with an astonishing 99% repayment rate. In 2006, it had seven million borrowing customers, 97% of them women (who tend to be the poorer sex in rural Islamic societies) in 73000 villages of Bangladesh. Microcredit had by then reached 80% of Bangladeshi’s poorest rural families and over half of Grameen’s own borrowers had risen above the absolute poverty line.   When a Grameen bank manager goes to a new village, he has entrepreneurially to search for poor but viable borrowers . He earns a star if he achieves 100% repayment of loans, and another star if he attains achievement of the 16 guarantees that all customers are asked to pledge, ranging from intensive vegetable growing through attendance of all children at school, to abolition of dowries. A branch with five stars would oftenb transfer to ownership by the poor women themselves. A branch with no stars would be in danger of closing, so borrowers tend to rally round with suggestions, such as which unreliable repayers to exclude.   An extraordinary income generator was the profession of telephone ladies. They borrowed enough to buy a cheap mobile phone from a Grameen subsidiary. They world draw fees for phoning to see if more profitable prices for crops were available in a neighbouring village, and from anybody who wanted to hire the phone to contact the outside world. This is a job that could only become important in a microcredit setting; the owner of a mobile phone in richer suburbia would not find many customers to hire her set. Village garment-makers were soon exporting clothes to far countries which made free trade by the importing countries important.   One special desire of Yunus was to improve the nutrition of poor children in the villages of Bangladesh, and he formed a social business with the large French food multinational called Danone. Grameen-Danone test marketed to find what sorts of fortified yogurt Bangladeshi children would like. Although Danone at first wanted large plants with refrigerated systems, Grameen won the debate to make then small plants who bought local milk and very cheap local distributors who knew which families had children who might buy the cheap yogurt fresh. Danone had to agree not to pay any dividend from the sales of the yogurt in Bangladesh so as to keep the price cheap at a few US cents per cup, but its $1 million investment remains returnable and it has learnt a lot about sales of a new product in poor countries.   THE FUTURE Will such Social Businesses spread as far as Yunus hopes? My view is that the Grameen experiment may prove to be most important for what might be called its macroeconomic impact. When more formal banking for the rich is intermittently in crisis, as is happening now. In this 2008, conventional bankers to the rich have trotted in panic behind the American giants who grossly mislent on subprime mortgages, and then sold these loans on in "securitised", and exploding and even "derivitavised" packages to weaker funds and banks who have frantically tried to disguise from their shareholders and from themselves how unmarketable and worthless some of these assets are. If all bank statements in early 2008 had been utterly and appallingly honest, runs by depositors out of them could already have accelerated out of control. Such banking crises are likely to recur before and after next January when a new American president takes office... ----------------------------------------------------------- I am pleased to be informed that The Economist is organizing a remembrance party of Norman Macrae on 16 November 2010. Mr Macrae was a rational optimist as well as a liberal economic journalist who was influential in both the academic world and the world of practice. I am happy that when I met Norman Macrae he was so enthusiastic about Grameen Microcredit, Social Business and our own entrepreneurial economics in Bangladesh. Over the years Norman made important contributions in several capacities. To many, he was best known as a prudent futurist. I look forward to the publications, including the Journal of Social Business, which friends of Norman Macrae are helping support. This will not only raise the profile of the sector in general, I feel the platform for improvement and growth of what this journal has started will be successfully set. I believe the article "Consider Bangladesh" by Norman Macrae will play a key role in promoting the concept of social businesses. I sincerely thank Macrae Family for promoting Social Business and I wish success in all its endeavors. Sincerely, Muhammad Yunus ..... ------------------------------------------ Remembering Norman Macrae 1923-2010 How to Avert A Great Depression Through the Hungry 2010s? Answer, By Making All Banking Very Much Cheaper This was Norman Macrae's last article written in December 2008 If banks in rich democracies had been truly competitive institutions, at least one of them somewhere would have seized the main opportunity created by the computer. This main opportunity was to make all deposit-banking vastly cheaper than ever before. By this cheapening it should make such banking hugely more profitable. Then further competition would search for the cheapest ways to guide all the world's saving into the most profitable (or otherwise most desirable) forms of capital investment, thus enriching all mankind. Instead, during 2008 the total losses of banks in rich democracies - in North America, West Europe and Japan - soared into trillions of dollars. Fearful for their solvency, these banks virtually stopped lending. The issuance of corporate bonds, commercial paper, and many other financial products largely ceased. Hedge and insurance firms also crashed. Mankind is thus threatened in the 2010s with its longest great depression since the hungry 1930s. Why? The strange answer seems to be that other happy consequences of modern technology promised to make this cheapening even faster. Call centres in Bangalore vastly undercut the middle class salaries of Midland bank clerk who until the 1950s expensively answered clients' questions in their branches in the City of London. Cheap mobile phones kept village ladies in once miserable Bangladesh as fully in touch with market prices as is the chief research officer of the First National Bank of Somewhere in California. His weekly salary is still 1000 times greater than the previous annual earnings of that village lady. The cost-effective way of running the old Midland or First National then seemed to be to cut its total salary cost by something like 99%. This did not please Western welfare governments, or the decent chief executives of the old Midland or First National bank. 3 Awaiting the sensation of a short sharp shock From a cheap and chippy chopper on a big black block - WS Gilbert in The Mikado - why it is uncomfortable to work in an industry which needs 99% redundancies. Western welfare governments have long preferred to run their banks in high cost cartels, and even invented reasons why this seems to be moral. Their deposit-banks have usually kept in cash only 10% of the total amount deposited with them. If 11% of depositors suddenly feared that their banks might go bust, this could accelerate a run that would send them bust indeed. Governments therefore thought that depositors would be less fearful if they were assured that the banks were officially and tightly regulated. Actually, this mainly meant that the banks had to hire ever more expensive lawyers so as to escape any crippling consequences from this regulation. The attached quote shows that Samuel Pepys understood this fact of life in his Diaries of July 21, 1662. I see it is impossible for the King to have things done so cheaply as do other men - Samuel Pepys on discovering an important commercial fact of life in his Diary, 21 July, 1662 The decent bosses of the deposit banks felt that the best way of avoiding sacking nine tenths of their staffs was by competing with a very different sort of financing called merchant banking whose earnings and bonuses were far more generous than those given to their own staff. These merchant banks were of peculiarly differing pedigree. In London, it was assumed that they could best be run by families like Barings who had done the job for over 200 years. In the 1990s, Barings went totally bust because one of its hired traders bet much of its money on a hunch that a bad earthquake in Japan meant that the shares of Japanese banks and insurance companies would become more profitable. In Zurich, merchant banks felt it most moral to keep the accounts of their depositors totally secret, especially if these accounts were being used to defraud their own countries' tax authorities. In 2008 those 4 secretive banks were then defrauded. In Wall Street, Goldman Sachs and Lehman Bros bid up their annual bonuses to millions of dollars for each partner. In 2008 even Goldman Sachs made a loss and Lehman Bros went bust. A former chairman of the Federal Reserve argues that "fearful investors clearly require a far larger capital cushion to lend unsecured to any financial intermediary now". He therefore thinks that taxpayers money should be ladled into them to make those investors less fearful. This seems far more likely to make depositors intermittently more terrified and cause any depression into the 2010s to linger on and on. In the 1930 s, the chief economic adviser to the government of Siam was called Prince Damrong. I try always to remember it - quote from former director of International Monetary Fund. One of the few big banks to make a profit in 2008 was the Grameen Bank (which means Village Bank) in that once basketcase country called Bangladesh. The sole staff in a branch serving several villages was once a woman student. It is now more usually someone who has learnt to use the computer in the right way. The rest of this report will examine how this marvellously costcutting operation works. Large banks mislending to the rich have run into losses that have created the slump. Politicians, thinking they are saving the world, are mislending huge sums to these mislenders and will eventually make the slump worst. 5 How to create cost-cutting banks? To begin with Consider Bangladesh - peculiar as this may seem. START IN A STARVING VILLAGE The Nobel peace prize for 2006 was controversially awarded, in Oslo, to a "banker for the poor" in usually unfashionable Bangladesh. Since the microcredit system pioneered by this Dr Muhammad Yunus really has lifted record millions of Bangladeshi women from the world's direst poverty, some of the world's toughest tycoons have thrilled to his stated aim to "harness the powers of the free market to solve the problems of poverty". To his fans' delight and astonishment, he is achieving exactly that. In the past quarter of a century, his Grameen Bank has lent (without collateral or lawyers) increasing billions of dollars to millions of poor women in the previously starving villages of Bangladesh, and got an extraordinary 99% repayment back. His often illiterate customers have started millions of successful small businesses in unimagined fields like mobile telephone ladies and saleswomen of the world's cheapest yogurt. All these successes have been won by keeping costs incredibly low. A banking operation that would cost Goldman Sachs $100 in New York or London would cost Grameen in Bangladesh well under 100 cents. This is a huge development in human history. Money can now be directly channelled into productive use by the world's poorest people, while unsuccessful lending to the rich has caused a world slump. How do we switch custom to cost-cutting banks?

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[chris macrae]