If a nation values anything more than freedom, it will lose its freedom; and the irony of it is that if it is comfort or money that it values more, it will lose that too.” - W. Sommerset Maugham

One of the biggest problem to address inequalities and the ‘democracy gap’ is the blurred lines between capitalism and democracy. To many people, both systems appear similar, but unrestrained capitalism must eventually undermine democratic institutions. Indeed, while 30 years of conservative push-back have succeeded into promoting the word ‘freedom’ as a synonym for minimal government intervention, we have forgotten how much power corporations can exercise over the political apparatus.

According to Wikipedia, capitalism is “an economic system and an ideology based on private ownership of the means of production and their operation for profit.” On the other hand, democracy is “a system of government in which the citizens exercise power directly or elect representatives from among themselves to form a governing body.” It is obvious that capitalism is an economic system while democracy is a political one. It must result that ‘freedom’ must have a different definition under both systems.

The problem with unrestrained capitalism is that over time it can create capital accumulation for a minority at the expense of the majority. In particular, large corporations with different objectives than political ones, namely profitability. Regulation and taxation are ways for governments to protect citizens and redistribute resources domestically, but they do carry a cost for companies. Corporations have thus deployed tremendous resources to influence the lawmakers and remove regulation, therefore boosting their financial positions.

Since consumers are a divided body with less ability to focus their fights and less resources to lobby, they usually lose, except when public pressure is too high for politicians to ignore the issue. The political process is thus hijacked for private gains. While this fact is obvious in the USA (with some outrageous maneuvers such as the recent FCC panel composition), the EU also has its own K Street: Brussels. Throughout the world, all kinds of regulations are being repealed, with the most obvious being the environmental laws.

Yet by allowing companies and individuals to earn more and have more ability to lobby for further reductions in taxation and regulation, governments are shifting the costs to citizens. No millionaire will live near a contaminated area, eat or drink tainted foods, be exposed to danger manufacturing defaults in every day products, or at risk from side effects of pharmaceutical products. But the middle class and the poor may have no choice and eventually dedicate a higher portion of their budget to spending that should not have been needed in the first place. This reduces total demand, which will weight on companies results.

Instead of trying to boost revenues and profits by shifting the costs to consumers, large corporations should boost demand by creating employment instead of constantly reducing their workforce. While this should be obvious, many people will still argue that the government is bad and the private sector can offer better services. This is clearly not true for public goods such as defense, education, healthcare, justice, or transportation infrastructure (among others). Capitalism and democracy can exist together, but capitalism must be restrained by the higher requirements of democracy. Regulation and taxation are more than necessary: they help maintain the foundation of the democracies we live in.

Greenland, the land of ice and snow, is burning – Greenland is experiencing a wildfire that is small compared to other European or American countries, but highly unusual for the country. The Arctic forests are burning at a rate unseen for the last 10,000 years, with a major risk being the deposit of soot on the ice sheets, which would speed global warming by creating a feedback loop.

Troops, Trolls and Troublemakers: A Global Inventory of Organized Social Media Manipulation – It turns out that democracies have the largest cyber unit that usually work during high profile election to target domestic audience, but also foreign citizens. In contrast, authoritarian government mainly target their own population and are much less sophisticated.

Error 404: A Look At Digital Decay – Internet links go dark for a variety of reasons as the web grows old, impacting anything from court decisions to academic research. With much of the content now being published online, some worry that the 21st may become an ‘informational black hole’ as resources steadily disappear.

Ships fooled in GPS spoofing attack suggest Russian cyberweapon – More than 20 ships in the Black Sea reported having their GPS indicating their position 32 km inland as the result of a likely ‘spoofing’ attack that mislead GPS. It may be originating from the Russian government afraid of precision strikes or individuals /non-state actors, as the article reports such attack are low cost.

Why Do Rich People Love Endurance Sports? – A large majority of marathon runners, tough mudders, or otherwise practitioners of endurance sports are or will be white collar workers. These activities provide them with clear cut goals, pain and physical exercises that their comfortable life do not offer.

North Korea’s hollow threat – Before we get to the scientific facts (such as the North Korean unable to perform ICBM atmosphere re-entry or actually detonate a small nuclear device in a missile) it should be obvious that the North Korean are venting out empty threats to appear more aggressive than they can really be. But fortunately for them, mainstream media dutifully relay their barks without showing that they can’t bite.

Monopoly power and the decline of small business: big business vs democracy, growth & equality – Small businesses were driven out by large companies, some of which being now monopolies delivering poorer services and exercising outsized political influence by lobbying the government with large sums of money.

Flagging Productivity Growth – How Much Is Due to Bad Management? – Productivity growth in America is low and it is difficult to pinpoint a single cause. There might be many different factors, such as short-termism and low investments, but also management techniques that effectively treat employees as disposable and micro manage them.

Quelle Surprise! Financial Firm Fines Are Way Down Under Trump – Not only are fines down sharply under the Trump administration, some journalists are actually promoting the idea that the fines are too high and that the government is robbing the banks. A total of USD 150 billion was paid in fines, much of which is non-cash expenses. This represents only 1% of the total damage of USD 15 trillion done by banks during the Great Financial Crisis.

Picture of the week: Mother Nature displays a hat-trick of beauty over Arizona

About Carlito Riego

"Great perfection may appear imperfect, but its usefulness is inexhaustible. Great abundance may appear empty, but its usefulness cannot be exhausted. Great correctness may appear twisted, great skills appear crude, great eloquence appear awkward. Activity conquers cold; inactivity conquers heat. Clear serenity governs the world." - Lao Zi