Prosperity Index Shows Capitalism Kills
Jeff Nielson: The Legatum Institute recently released their 2012 “prosperity index”, its annual ranking of the well-being of the world’s nations. One might argue that mere economic prosperity is a very simplistic benchmark by which to rank nations, which is why it’s notable that this index is a much broader gauge than mere economic factors.
The Institute states that it’s rankings are derived from eight, separate categories of sub-rankings:
3) Social capital
4) Safety and security
6) Personal freedom
This makes this assessment both more interesting and more useful/meaningful. The term “prosperity index” clearly understates the scope of this ranking, and referring to it as a “quality of life index” might be more accurate (if slightly more cumbersome). Perhaps more importantly, as the Legatum Institute points out itself; these rankings provide an excellent insight into which nations are most likely to prosper tomorrow.
Categories like education, social capital, opportunity, and governance are especially forward-looking, in that nations which currently excel in these categories today are almost certain to outperform their peers going forward. Because of this, perhaps the most important aspect to these rankings is to look for nations which are either rising or falling in the rankings.
Not surprisingly, the rankings tend to be very stable; it’s not easy to rise in the rankings, nor is it easy to fall – as political/social/economic inertia tends to carry nations along a similar path year-to-year. For example, Norway has ranked #1 for the past 4 years. Denmark has ranked #2 over that same period.
Changes in a single year (either up or down) by more than one spot are unusual, and no nation in the top-20 rankings has risen or fallen by more than three spots in a single year. For example, the combination tsunami and Fukushima-holocaust only caused Japan’s annual ranking to fall by three positions, from 18th to 21st.
In this respect, the decline by the United States from 10th position to 12th position in 2012 says a lot of things. Let’s start with the “U.S. economic recovery.” For three years we have been forced to listen to the absurd hype about the U.S.’s mythical “economic recovery”, where it has supposedly been outperforming all the economies of the Western world – with a vast array of government “statistics” supporting this claim.
Regular readers know that, in fact, U.S. economic statistics are little more than a Through-The-Looking-Glass fantasy. In the real world, the raw data shows that the U.S. housing depression continues unabated; the number of unemployed Americans is steadily increasing; average wages continue to decline for those fortunate enough to still be employed; all levels of government are becoming rapidly more insolvent; and that’s just for starters.
The Legatum Institute’s ranking is nothing less than an indictment of this bogus U.S. economic propaganda. Nearly alone among Western nations (along with Canada’s fiscally reckless government); the U.S. hasn’t undertaken even token “austerity” at the federal level to attempt to rein-in its $1+ trillion annual deficits.
With three years of an “economic recovery” where it has (supposedly) outperformed its Western peers, and with continued free-spending – on hand-outs to its corporations and funding for its war-machine – official data would lead us to believe there could be no possible basis for a sudden drop in the U.S. ranking.
It should also be noted that during the previous two years of this supposed economic recovery that there was no gain in ranking in either of those two years. Rather, the U.S. ranking remained flat, in 10th position. Thus the net result of three years of this mythical recovery was a decline of two spots in global rankings.
However, it should be pointed out that there is an alternative means of interpreting the U.S.’s decline in global rankings, and overall 12th-place ranking. While the U.S. ranking has been falling, social spending has plunged (at the state and local levels). Hand-outs to large corporations have increased. Corporate profits have increased. And while average wages for the Little People continue to steadily fall; for those at the top, wage increases continue to rise exponentially. Taxes for those at the top remain at all-time lows.
In other words, by any/every definition of the word; the U.S. has become steadily more “capitalist” over the past three years. Yet with three years of “economic recovery” and three years of the West’s most-extreme version of capitalism becoming yet more extreme; the net result has been a significant overall decline in well-being – and the immediate prospect of further deterioration (as indicated by the decline in ranking).
Conversely, which nations consistently occupy the top of the rankings; including the top three positions in 2012? The “socialist” Scandinavian nations of northern Europe: Norway, Denmark, and Sweden – i.e. nations which put people before (corporate) profits. Right-wing ideologues will desperately search for excuses; most likely forced to fall back on simply labeling the Institute “a bunch of left-wingers”. However the empirical data across the Western world over the past century is unequivocal.
During the decades when our (modern) social programs were being built, when union membership (and union strength) was steadily rising, when the wage-differential between those on top and average wage-earners was shrinking; those were the decades when Western prosperity was soaring – across the board.
In short, as our economies and societies became steadily more “socialist”; our economies (and societies) were on a steady upward progression. Meanwhile, the recent decades of economic decay across the West have coincided with the following changes:
1) union membership has collapsed
2) the wage-differential has risen to its highest level in history
3) taxes for those on top have gotten lower and lower
4) social spending (in real dollars) has been plummeting
In short, as Western economies have gotten steadily more “capitalist”; not only have they reversed the previous decades of increasing prosperity, but they are currently all simultaneously in economic nose-dives toward bankruptcy.
Why did our governments start creating social programs a century ago? Why did our governments enable the growth of unions, and pass myriad work-place laws to protect people? Because the century of unbridled capitalism which had preceded this Era of Enlightenment had conclusively shown the predatory nature of unregulated/unmitigated capitalism.
Contrary to right-wing mythology, there has never been an example in all of history where making a healthy economy more “capitalist” has produced more prosperity. Rather, all our modern economic data shows the exact reverse: without a suitable choke-chain to control them, the world’s “capitalists” do nothing but rape-and-pillage – and decrease overall prosperity.
“Globalization”, deregulation of the financial industry (and countless others), and slashing taxes for the Fat Cats were/are all movements which completely catered to the capitalists – and the wake of social/economic carnage left behind them is too enormous to be even briefly summarized in this article.
Europe is crumbling; economically, socially, and politically. The U.S. is so far past the point of insolvency that its federal politicians are too cowardly to attempt even the most-minimal spending cuts – for fear that the U.S.’s Ponzi-economy would immediately collapse. And with Canada’s government mimicking U.S. economic policy in virtually every way, its only consolation will be “last one down the drain.”
Three decades of lemming-capitalism in the West, as servile governments cater more and more to our own Oligarchs, has brought us literally to the point of economic ruin. The Legatum Institute rankings should be a wake-up call for us all. I’m not holding my breath.
Jeff Nielson is from Canada and is a writer/editor for Bullion Bulls Canada www.bullionbullscanada.com. He has a personal background in law and economics. Bullion Bulls Canada provides general macro-economic and political commentary, since the precious metals markets are among the most complex (and misunderstood) in the world.
Bullion Bulls Canada also provides basic coverage of Canadian precious metals mining companies. Canada is the global leader in mining exploration, and Canadian-listed mining companies (on the Toronto Stock Exchange and Venture Exchange) are responsible for the majority of the world’s most-promising discoveries.