Perfectly understandable

We don’t pay for everything today, we can’t pay for everything today, and it was never true that we would be able to pay for everything.
We were slightly distracted on our journey from pre-revolution to post-revolution into thinking that our reality was defined by the 3 revolutions (industrial, technological and information). We are still humans, and the revolutions were only changes to our methods, not our natures. Our reality was before, and remains today, that of a social, group animal surviving on a finite planet through our mutual exchange of support.

In pre-revolutionary society (pre-1840) the vast majority of people survived almost exclusively through the mutual exchange of support. There was never enough commercial activity to even consider paying for mutual social security, it had to be bartered for. The 3 revolutions transformed our ability to generate commercial activity. In a span of only 150 years (1840-1990) we expanded the percentage of total human activity that was commercial in nature from a small minority, to what seemed to be almost total encompassment. The speed and breadth of the revolutions almost blinded us to our reality, the reality of interdependence that we are now re-facing as we emerge into the post-revolutionary world.

For the short period when a society is in the midst of its revolutionary progression, it naturally has a population that consists mostly of working age adults, before the effects of advanced healthcare have kicked in, and before the information revolution requires the extended incubation of advanced education. During this mid-revolutionary phase the society can pay for its limited social needs by taxing the expanding economy.

Early adopter societies, entering the revolutionary cycle before the majority of other societies have started, can also exploit under-priced resources abroad, and create an over-sized economy that allows the increasing social burden of its maturing demographic to be paid for out of a tax on its inflated economy.

understandingBut once the majority of societies have entered the revolutionary cycle it is not possible to maintain an exploitation-inflated economy, because resources are no longer available at below true value.

A mature post-revolutionary society has a minority working age population and an economy that, while greatly enlarged from its pre-revolutionary state, is still a minority of total activity. At this point, a tax on the economy high enough to pay for the social needs will reduce economic performance, creating a downward spiral.

This looks like a big problem. But in fact it is just the re-emergence of a truth that was always there: no matter how blindingly brilliant the 3 revolutions have been, they did not change the basic truth about our nature: we are a group, social species, dependent on our group for our individual survival, and visa versa.

There has always been a massive amount of activity in our group that was never “paid” for, and it could never be afforded from a tax on commerce. Only the short period in the evolution of a society through its revolutionary cycle, when working age populations are high, supports an illusion that we can buy our way out of our interdependence.

The “first world” in the 20th C was not at a destination, it was simply a stage in motion through the natural progression to a normalised demographic, in a resource-constrained world. Human populations naturally resolve into quite likeable and practical distributions, as birth rates fall off with increased security. The pricing of finite resources naturally resolve to comply with the closed-circuit reality of our planet. This normalised reality is not a problem, it has ample opportunity for greater joy, but it does require us to recognise and accept our situation. We do not live lives defined by the value of commerce (revolutionary activity), nor are we limited by the taxes we can impose on commerce. The only real limit we face is that of finite resources.

Our reality is the same as it ever was: the majority of our activity is social, a barter between humans for services. A minority of the activity in an advanced human society is commercial, and that’s OK.

We cannot abandon the revolutions, our enlarged populations are entirely dependent on the continuing practice of industrial, technological and information activity. But our dependence on them is purely practical. Revolutionary activity is contextual to our desires, and our desires are human. Defined as “joy”, we seek and find reward to interconnection and interaction on a human level, commerce is merely an enabling method. The future of humanity depends on accepting our social nature and leveraging the revolutions.
The way to accomplish this unification is to accept our mutual social contract for support services, and welcome the functional contributions of the revolutions while rejecting their dysfunctional elements. Industry, technology and information are all good when filtered through understanding of their roles in support of human society. The two primary requirements this understanding gives us are:

  • our success is based on the wondrous specialisation we can support within our groups
  • we live on a finite planet.

The aspects of the revolutions that support specialisation and sustainability are invaluable. Industrial, technological and information processes that denigrate specialisation or sustainability can be comfortably jettisoned.

For data and analysis of tax rates, see here.

7 thoughts on “Perfectly understandable

  1.“The “headwinds” holding growth back include key economic issues such as “rising inequality”, the “end of the ‘demographic dividend'”, the “overhang of consumer and government debt”, as well as “the consequences of environmental regulations and taxes that will make growth harder to achieve than a century ago.”While Prof Gordon has his naysayers, his outlook is surprisingly corroborated by other experts. HSBC Group chief economist Stephen D. King’s new book, When the Money Runs Out: The End of Western Affluence, portends how the age of high economic growth will never return, largely due to the “exhaustion of various one-off productivity gains that boosted growth after World War II” and “a tripling in rates of consumer credit founded on an unsustainable increase in housing prices”, among other factors. King disagrees with Gordon’s worst-case scenarios, but agrees that the dividends that made high growth possible in the past appear largely “unrepeatable.””


  2. Failure to tackle the economics properly leads governments to “austerity” solutions. But that only makes matters worse by disuading young adults from starting families, so the population becomes even more dependent in the future.


  3. The UK’s fiscal watchdog (Office of Budget Responsibility) is telling us the situation is untenable. But who’s actually reading this stuff?”Our third Fiscal sustainability report published on 17 July shows that further tax increases or spending cuts are likely to be needed after the current fiscal consolidation to help meet the costs of an ageing population.” “Under our central projections, the government would need to increase taxes and/or cut spending permanently by around 1.9 per cent of GDP (£29 billion in today’s terms) from 2018-19 onwards to satisfy the inter-temporal budget constraint.” 


  4. From Bloomberg: ”A remarkable boom in the world’s working-age population is ending, and a new boom in the population of retired people has begun. People are living longer; more importantly, when it comes to reshaping the global age structure, they’re having fewer children. Today, there are roughly four people of working age for every person aged 60 or over. By 2050, it’s estimated there’ll be just two.”


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