Serfs Up – Are Rich People the Problem? :: by Wilfred Hahn

A frequent topic of the last few decades has been the rising levels of debt, not only around the world, but also domestically in North America. Debt in itself, of course, can have its legitimate uses. However, when debt rises to unsustainable levels relative to underlying income, manifold problems can arise. This applies to households, corporations, and nations,  potentially also having geopolitical implications.

As is now well known, government debt levels have soared over the past 3 to 4 years, in response to the trials of the Global Financial Crisis (GFC). Even as corporations have been hoarding cash and households have slowed their borrowings, sovereign nations have piled on debt as never before. In the case of the U.S., government, debt has grown at a rate of 28% per annum since the third quarter of 2008. Of course, ultimately, the burden of country debt falls upon its citizens … in one way or another. That being the case, one of the greatest sources of wealth for corrupt operators are government bail-outs. But, just what is the real significance of rising  government and transnational debt? To find out, we must look elsewhere.

As an analyst working in the global financial sector for over three decades, one well understands that there are always two sides to every transactions. There must be a buyer for every seller. This is a concept well recognized in the Bible. For example, says Isaiah: “And it shall be, as with the people, so with the priest; as with the servant, so with his master; as with the maid, so with her mistress; as with the buyer, so with the seller […]” (Isaiah 24:2).

That it takes two sides to every transaction will be understood by everyone. But, Isaiah goes on: “[…] as with the lender, so with the borrower; as with the taker of usury, so with the giver of usury to him, a debtor for every creditor.” There must also be lender for every borrower. Though we also believe these verses in Isaiah are symbolically significant, for now, we focus on a relatively simple point: All human transactions (the same point that Zechariah makes in Zechariah chapter 5) have a two-sided nature. And, as such, what is mostly overlooked these days with respect to rising debt levels, is the flipside — namely those that have the money to lend.

From time to time, we hear conference speakers who scare the daylights out of their audiences by highlighting newspaper statistics of the massive increases in government debt levels, deficits … the debasement of money … etc. They mostly miss the picture both in respect to how the financial markets really work and eschatological. It is this: For every borrower there must be a lender! If there is so much borrowing, just who is doing the lending? Let’s focus on this side of the equation, as this reveals a part of the missing story.

To borrow money, one must first find someone who has a claim of ownership on money that they can then lend. The more that is being borrowed, the more money someone else must have to lend. What a rising level of debt then must mean is a widening chasm between those that borrow and those that have the money to lend. In other words (ignoring the role of intermediary financial institutions) riches are being polarized. Wealth is being accumulated by an ever smaller group, even as the majority becomes poorer (at least, in relative terms.)

This widening skew in wealth distribution is supported by facts. Numerous reports in recent decades have documented a growing stratification of wealth, a phenomenon that has occurred around the globe. (Please see the graph on the front page of this report, which portrays this development in the U.S.) Quoting Laura D’Andrea Tyson (Chairwoman of the Council of Economic Advisors under President Clinton.) “The top 1 percent’s share of national income has also been rising in most other advanced industrial countries, but it is by far the largest and has grown the most in the United States.”

To find out where riches are being accumulated in the U.S. population, we quote her further:

“Why have incomes of those in the top 1 percent soared? Their occupations provide some clues. From 1979 to 2005, non-financial executives, managers and supervisors accounted for 31 percent of the top 1 percent, medical professionals for 16 percent, financial professionals for 14 percent and lawyers for 8 percent. Together, executives, managers, supervisors and financial professionals accounted for 60 percent of the increase in the top 1 percent’s income, with a widening compensation differential between those in the financial sector and those in other sectors of the economy after 1990. Superstar athletes, actors and musicians, often portrayed among the super-rich, accounted for about 3 percent of the top 1 percent from 1979 to 2005, far less than the less glamorous people (mostly men) who lead and advise America’s businesses.” (November 18, 2011, Tackling Income Inequality, Laura D’Andrea Tyson).

Reviewing other reports and surveys, we conclude that income and wealth inequality have indeed risen to levels that breed intractable and chronic problems for economies and societies. By some measures, today’s wealth skew may even be more extreme than during the later stages of the ancient Roman Empire.

Then, whom to blame to today? The rich? Before we answer this question, allow us a short disclaimer. For the record, we have never been motivated by the “politics of envy” nor have we ever taken an adversarial position against the freedom to become rich. Inherently, there is nothing sinful about being rich. What matters most are the motivations that guide the heart of a person, whether rich or poor.

The verses that we had quoted from Isaiah 24 shows the deteriorating sequence of mankind’s societies with respect to economic and financial values. At the highest level of the seven reciprocal relationships that he mentions, is the priest and the people. In fact, that is indeed how economies were first organized in ancient Mesopotamia. At the bottom, the debtor/creditor relationship becomes the foundation of society.

That indeed mostly identifies the economic structure of the world today as the last and most debased stage of  society. Virtually 99% of mankind’s monetary systems are backed by debt. We today live in an age where financial alchemists make the most money, not industries that actually produce real wealth and healthful improvements for mankind. Over the past several decades, it has been the financial traders and speculative investors (collectively captured under the term “Wall Street”) that have made countless billions, without creating any real wealth, even as economic enslavement for the masses has advanced. As such, the world has witnessed a creeping serfdom. (Serfs up!)

We are in an age where “raffendes Kapital” — a term from the old Austrian economists, meaning parasitic, rapacious capital — is in command, a state of affairs sometimes also called “money manager capitalism.” It evinces a manifest mentality of greed, and short-terrmism that is without much responsibility to society and fellow man. It is the parallel accompaniment to the age of Neoliberalism. Many of the same values apply and is the natural handmaiden to an increasing materialism/humanism of the world.

The executives of the corporate world also play a significant role. Collectively, they have become the most powerful force in the world. In essence, the globe-roving corporation is nothing more than a powerful “human obedience structure”, the same powerful force that powered the Roman phalanx, Genghis Kahn … even the Jesuits. The accepted behaviour of corporations today is to employ thousands upon thousands of off-shore, tax-avoiding blinds; thousands of lobbyists with which to “buy” politicians; and paying executives exorbitant compensation to encourage sometimes psychopathic behaviours in the pursuit of profit maximization.

But, back to the rich people: Are they at fault? Some of them indeed hold complicit roles. And, some are indeed oppressive and greedy. The late Kenneth Boulding, a provocative economist who was also a devout Quaker, would argue, “that you cannot imagine how incredibly greedy they are, and how monumentally stupid they are, too. They will gleefully roast the goose that lays the golden egg.” Eli Wallach, in the movie, Magnificent 7, expresses the founding dogma of the selfish, greedy rich: “If God hadn’t meant for them to be sheared, He wouldn’t have made them sheep.”

Wealth has such a powerful influence, that few are able to remain unstained by it. In fact, for the most part, the Bible does not speak kindly about the class of people that are called rich. That said, a number of righteous rich people are also extolled in the Scriptures.

But, to limit the blame for the corrosive financial trends that we are witnessing in the world today to privateering financiers, corporate executives and other rich people, would be wrong. Why?

Materialism affects everyone, rich and poor, debtor or creditor. We see it at every level. It has ensnared the priest, the servant, the maid and the debtor. The “priest” today, sadly is also much compromised. For example, the Prosperity Gospel has spread far and wide both in blatant and subtle forms. Selling materialism gets people to fill seats in the church.

The maid, servant and debtor all today clamour for things because they have lost a view of eternity. This rising preoccupation with materialism is witnessed everywhere. For example, in recent years, there has been a surge of TV programming that caters to this proclivity. It started with the Antiques Roadshow. Today, there seem to be tens of shows that cater to the fixation with stuff and garage sale junk, lately even a proliferation and idolization of pawn shop shows.

It seems to be very late in this deteriorating trend of materialism when even the nation’s “junk” has been popularized. The neighbor’s garbage and grandma’s attic have now all been arbitraged and revalued on the strength of a mythical buyer’s appetite “on a good day.”

In conclusion, whenever you hear someone hype the topic of rising debt, also think of the reciprocal implications. It is not just a story of ill-advised governments (and their politicians) and consumerist households, but of a widening wealth skew, increasing serfdom and hoarding of wealth.

From an eschatological perspective, an indebted world order is indeed prophesied. For a more in-depth perspective please see Last-Day Oppressors: Honored Elites & an Indebted World Order and our recent 3-part Jubileum series available free from our website.