Violence... The story so far

Economic gaps between people and between nations go with the very concept of free enterprise. Problems arise when gaps become too small to motivate individual achievement or so large that they provide motivation for extremist responses to terrorism on the parts of small groups and individuals. It is true that money is not the only motivator. Unless, that is, there is not enough of it. When gaps among nations become too extreme, trouble in the form of TERROR looms, as it has in our times.

Communism doesn't work because achievement of raw power is the only motivator and that leaves most of the population out and central planning can never be as efficient as a market based economy. Neither is there any check on the scoundrels in power.

Islamic governance, once all the rage in Middle-Eastern cultures, suffers some of these same defects, and is to a large extent still stuck in feudal-like economic systems. In just two centuries the ratio of economic activity between the rich nations and the Third World nations increased from 2:1 to 30:1. For too many, it seems, there is no end to personal greed and power, the basic drives for all good plutocrats.

Plutocrats:

• put themselves in a special "elite" class in terms of money and power.
• nominate each other to their board rooms.
• support politicians who support plutocracy.
• have trouble resisting money and empire as ends in themselves.
• play the special interest games; lobby to their individual advantage at the expense of society.
• insist on policing their own performance; avoid external controls on their organizations.
• behave as if they are above the law.
• laugh all the way to the bank.

The United States has recently carried Plutocracy to the extreme. For example, the 25 Jan 2004 New York Times reports:

Nation	CEO Pay / Employee Average
United States	531
Brazil	57
Mexico	45
Britain	25
Canada	21
France	16
Germany	11
Japan	10

The argument is that high pay is necessary for a company to attract leaders who can compete. This is hogwash. The European Union is coming on strong, and so is China. The US will be overtaken economically by both these behemoths if we all stay on our present courses.

Some tough specific questions:

• Why has the European Airbus Industries overtaken Boeing? [French and German executives earn 40 fold less than their US counterparts relatively speaking.]
• Why are China and Europe coming on so fast if executive pay is so critical?
• Why can highly-paid executives, even the criminals, still draw huge bonuses after leading their companies to the brink of, or into, bankruptcy?

Some tough aspects:

• Leadership abounds at all levels in organizations; plutocracy is just another expression of Authoritarianism.
• Many US companies do very well with European levels of CEO pay.

High pay is no guarantor of character or even corporate survival; consider Enron. See next section:

Hall of INFAMY

"The Wall Street Journal," 28 June 2002, provides a snapshot of corruption from which we nominate all of these players for the Hall of Infamy for their poor leadership and oversight, whether or not any are ever convicted of crimes.

Individual/Firm	Investigations	Annual CEO Compensation
John Rigas Adelphia Communications*	Accounting Practice Improper loans	$1.86M
Joseph Beardino Arthur Anderson*	Obstruction of Justice	Not Available
David Duncan Arthur Anderson*	Fraud Obstruction of Justice	$1M +
Chuck Watson Dynegy**	Accounting Practice Trading Practice	Not Available
Kenneth Lay Enron*	Accounting Practice	$33.7M plus $70M loans
Jeffrey Skilling Enron*	Accounting Practice	$5.6M
Samuel Waksal Imclone	Insider Trading	$2.25M
Joseph Nacchio Quest Communications	Accounting Practice	$3.32M + 7.25M stock options
Dennis Kozlowski Tycho	Personal Taxes	$36.05M + 1.4M stock options
Martha Stewart Living Omnimedia	Insider Trading Obstruction of Justice	$2.84M
Bernard Ebbers World Com*	Accounting Practice Improper loans	@1M + 1.2M stock shares
Scott Sullivan world Com*	Accounting Practice	$10.7M + 619K stock options
Andrew Fastow Enron*	Accounting Practice	$5.6M

*Filed for bankruptcy or discontinued business.
** Debt rating: Junk Bond

This is merely a summary of public knowledge. Some or all of these individuals may be cleared of all wrong doing after investigations or trials. Nevertheless, it is clear that the semi-feudal nations of the Middle East have nothing on us in immorality.

Relation to Violence

It is easy to believe that one important cause of terror is the gap between the haves and the have-nots, whether real or perceived. And that is true enough as far as it goes. However, there are numerous examples of have-not societies that are peaceful, even though they are seriously disadvantaged economically. At the same time, our own society is riddled with violence by individuals and, less commonly, pairs. So there is more to terror than simple economics. See Hope for another slant.

Nevertheless, it is hard to envision justice for anyone on Earth unless there is equality of opportunity for all. The present gap between the have and have-not nations is now too extreme to ignore. The have-nations essentially bear that responsibility. Any global reformation must be led by the haves. At the same time, the have-not-nations must join in the reformation discussed below.

Reasons are not hard to find. Islamic nations, retarded by a Qu'ranic view of governance, began falling behind with the advent of gunpowder, seamanship, and the printing press. The industrial revolution effectively buried the Middle East. Discounting oil, the region of 21 Islamic nations today have gross exports about equivalent to those of Finland. And oil revenues do little except enrich the ruling classes and the imperial companies.

Again, there is another factor. Many Third-World, but non-Muslim, agrarian economies tend to remain static or grow only slowly in pace with the population swinging back and forth between feast and famine. Agrarian economies are beset even more with the same problems of superstition, avarice, and human frailties than are their richer brethren. Their progress is further impeded if their governance systems are despotic, as is too often the case.

At the present time, the world's people collectively are consuming 20% more resources than nature replenishes each year. If every human on earth could suddenly be elevated to the same standard of living enjoyed by Americans, total consumption would be 400% more than nature renews.

These statistics should be arresting to anyone and everyone. A continued expansion of the gap eventually would have made terrorism a given. America has not been in the forefront in anticipating this problem our present leadership is like a crippled computer, plenty of RAM, but the CPU (where thinking occurs) is impaired. This description also fits too many otherwise good and patriotic Americans. In part the missing CPU is a product of a school system that lets us get by on rote memory, and too often encourages that approach. Another reason for lack of cognition is that religious fundamentalism in our society mimics the worst of Islam by limiting free thinking. See Fundamentalism.

Economic disparity cannot be the whole reason for terrorism. Many non-Islamic countries of the Third World are as poor as any in the Middle East and do not spawn terrorists to any similar degree. And many terrorists, especially the leaders, come from middle class, even well-to-do families. Muhammed and bin Laden share not only the same geography by birth, they share a rejection of the powers-that-be on the Arabian Peninsula. See Making of the Terrorist. Despotism plays at least an equal role in spawning terrorists.

When considering the gap between rich and poor countries, the proper question is: how do we help poor countries catch up? For guidance, we only need to study how the rich nations moved ahead so fast since Queen Victoria's day. Those that did, had secular governance that recognized and rewarded discovery whether it was a new world, a new machine, new literature, or new medicine. See Modernism and Governance.

Within the US, the last decade has seen the economic gap widen to obscene degrees not only between the US and other countries, but between individual Americans as well. For CEOs, their gain was another 4:1 beyond the average. In the last dozen years, if the minimum wage had increased as much as it has for CEOs, the minimum wage would now be $30 per hour or so.

Corporate chieftains robbing the tills of their companies or the stock market are not different, morally, from the Sheiks siphoning off national oil revenues to their own families or clans. Fraud is fraud.

This overpaid-executives feature was uniquely American in the 1990s. In every case, it seems, the corporate goal was to increase the corporate stock trading price while linking that event to bonuses, stock options, and loans. This basic conflict of interest is a disconnect from economic reality of the first order. Irrational pressures to increase market capitalization fostered self-serving behavior at employee and stockholder expense via:

• shaky acquisitions,
• questionable accounting practices,
• insider trading,
• tax evasion,
• improper loans to officers,
• propaganda designed to inflate stock prices, and
• obstruction of justice and perjury to hide the above.

Instead of providing corporate goals for creating capital in all its three varieties, corporate executives and directors found ways to line their own pockets. It seems that most CEOs sit on several boards. In essence they gave whopping annual raises and lucrative stock options to each other. This fundamental disconnect from economic reality was not psychotic; it was deliberate, making it all worse. This is not just an individual's character problem, rather it is a problem with a system that allows conflict of interest to run rampant with inadequate checks. Enron executives bailed out with more than a half billion dollars while Enron employees were forced to hold their stock in 401K retirement plans, some ended up with one penny on the dollar.

After all the bubbles burst, it was business as usual in the boardrooms. Executive pay continued to increase even as the 401K plans bankrupted. Economic down turns are something governments and CEOs can do something about. The 401K crowd is helpless. Like an irresponsible tax cut for the rich, this is Plutocracy at its worst.

Links relating to world economy and the gap.

Corporate Reform — citizenworks.org
Enron on Ethics — businessethics.ca
Executive Pay Watch — AFL/CIO
Failure Doesn't Matter — San Jose Mercury News
Greed Out of Control — Third World Traveler
Poverty and Environment — Innocent Kabenga
Some Reasons Why the GAP — Dollars and Sense
Writers Group — Washington Post

The Middle East is relatively poverty stricken. Religious fundamentalism fosters terrorism and its export, according to Uri Savir, the Israeli official who led the Oslo Peace negotiations. (For more on that see: Zionism.) Religious fundamentalism feeds on fear, superstition, and ignorance born of poverty. As far as the US is concerned, Saudi Arabia is the current nominal leader at producing terrorists.

Links on poverty and economic inequality:

Action on poverty Link — Oxfam America. "Committed to creating lasting solutions to poverty, hunger, and social injustice."
Bretten Woods Project — brettonwoodsproject.org
The Bush Tax — DEAN FOR AMERICA (for a huge hidden negative for the states in our national account balances.)

Molly Rush -- Merton Center. More on the gap:

According to the IRS, in 1986, the richest 1% had after-tax incomes equal to 12 times that of the bottom 90% (that's $273,562 to $23,451, adjusted for inflation in 1997 dollars).

By 1997 the richest 1% made 22 times or $517,713 compared to $23,815, the average for the bottom 90%.

In 1999 half of all taxpayers made less than $26,415.

In terms of wealth, from 1983 to 1998, the richest 1% got 53% of the total gain in marketable wealth. And this same group got 52% of last year's tax cut."

Resources for ending hunger and poverty — RESULTS
United Nations Development Programme — UNICEF Publications

See also Plutocracy & Economic Extremism