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Bill Clinton - It's the economic paradigm, stupid!

At first glance, it might seem redundant to emphasize people as the central focus of economics. After all, isn't the purpose of economics, as well as business, people? Aren't people automatically the central focus of business and economic activities? Yes and no.

The prevailing economics systems in the twentieth century were capitalism and communism.  Both systems were hypothetically aimed at creating a means of providing people with comfortable, safe and secure life.

Overall, capitalism was able to produce a much larger middle class of people between rich and poor, and has gained precedence due to making safe and secure life possible for more people.   But, it's various methods over the past 100 years left millions of people to suffer and die more indirectly than outright murder.

18 years ago in 1996 US President Bill Clinton was warned about the inadequacy of traditional capitalism and wealth distribution in a seminal paper which described the risk of global uprisings by those disenfranchised.

"Listen: these people are not going to go quietly into the night. Once a person is intentionally cast aside, all prevailing social contracts which might pertain no longer apply and all previous bets are off. It becomes self-defense for the intended victim.

Once a nation or government puts people in the position of defending their own lives, or that of family and friends, and they all will die if they do nothing about it, at that point all laws, social contracts and covenants end. Laws, social contracts and covenants define civilization. Without them, there is no civilization at all, there is only the law of the jungle: kill, or be killed. This is where we started, tens of thousands of years ago.

By leaving people in poverty, at risk of their lives due to lack of basic living essentials, we have stepped across the boundary of civilization. We have conceded that these people do not matter, are not important. Allowing them to starve to death, freeze to death, die from deprivation, or simply shooting them, is in the end exactly the same thing. Inflicting or allowing poverty on a group of people or an entire country is a formula for disaster."

'It is only when wealth begins to concentrate in the hands of a relative few at the expense of billions of others who are denied even a small share of finite wealth that trouble starts and physical, human suffering begins. It does not have to be this way. Massive greed and consequent massive human misery and suffering do not have to be accepted as a givens, unavoidable, intractable, irresolvable. Just changing the way business is done, if only by a few companies, can change the flow of wealth, ease and eliminate poverty, and leave us all with something better to worry about. Basic human needs such as food and shelter are fundamental human rights; there are more than enough resources available to go around--if we can just figure out how to share. It cannot be "Me first, mine first"; rather, "Me, too" is more the order of the day.'

Soon after, the author, who had served in an honorary capacity on Clinton's re-election committee, became one of the disenfranchised. He lived two years on the streets until the first signs of the global economic crisis gave the opportunity to travel to Russia and research the potential for an experimental poverty eradication initiative using the approach defined in the 1996 paper. His report was fed back to Clinton's office

The Tomsk regional initiative as it became know, was a highly successful microenterprise development program which leveraged $6 million for a community microfinance bank.and led to creation of around 10,000 micro businesses, more than 80% of which were run by women.

In subsequent work in Crimea, where a 'smart' economic strategy was advocated the author reflected on the 9/11 attacks and what had been conveyed to and acted on by the Clinton administration:

"By leaving people in poverty, at risk of their lives due to lack of basic living essentials, we have stepped across the boundary of civilization. We have conceded that these people do not matter, are not important. Allowing them to starve to death, freeze to death, die from deprivation, or simply shooting them, is in the end exactly the same thing. Inflicting or allowing poverty on a group of people or an entire country is a formula for disaster.

These points were made to the President of the United States near the end of 1996. They were heard, appreciated and acted upon, but unfortunately, were not able to be addressed fully and quickly due primarily to political inertia. By way of September 11, 2001 attacks on the US out of Afghanistan – on which the US and the former Soviet Union both inflicted havoc, destruction, and certainly poverty – I rest my case. The tragedy was proof of all I warned about, but, was no more tragedy than that left behind to a people in an far corner of the world whom we thought did not matter and whom we thought were less important than ourselves.

We were wrong."

By 2003, the author had returned to poverty in the US and began fasting for economic rights in Chapel HIll NC, where John Edwards was then senator. I fowarded progress reports about the fast to Edwards from email to fax. Finally with little hope of gaining media attention I offered an exit strategy with an invitation to the UK.   

In 2004, with a proposal to tackle poverty in the UK, the same warnings were made about the potential of uprisings and the strategic imperative to address wealth distribution: The business model proposed distributed no dividends and invested at least 50 percent of profit into simulating the local economy through investment in CDFIs.

"The opportunity for poverty relief was identified not only as a moral imperative, but also as an increasingly pressing strategic imperative. People left to suffer and languish in poverty get one message very clearly: they are not important and do not matter. They are in effect told that they are disposable, expendable. Being left to suffer and die is, for the victim, little different than being done away with by more direct means. Poverty, especially where its harsher forms exist, puts people in self-defence mode, at which point the boundaries of civilization are crossed and we are back to the law of the jungle: kill or be killed. While the vast majority of people in poverty suffer quietly and with little protest, it is not safe to assume that everyone will react the same way. When in defence of family and friends, it is completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world. People with nothing have nothing to lose. Poverty was therefore deemed not only a moral catastrophe but also a time bomb waiting to explode. Poverty reduction and relief became the overriding principle and fundamental social objective in the emerging P-CED model."

“Dealing with poverty is nothing new. The question became ‘how does poverty still exist in a world with sufficient resources for a decent quality of life for everyone?’ The answer was that we have yet to develop any economic system capable redistributing finite resources in a way that everyone has at minimum enough for a decent life: food, decent housing, transportation, clothing, health care, and education. The problem has not been lack of resources, but adequate distribution of resources. Capitalism is the most powerful economic engine ever devised, yet it came up short with its classical, inherent profit-motive as being presumed to be the driving force. Under that presumption, all is good in the name of profit became the prevailing winds of international economies — thereby giving carte blanche to the notion that greed is good because it is what has driven capitalism. The 1996 paper merely took exception with the assumption that personal profit, greed, and the desire to amass as much money and property on a personal level as possible are inherent and therefore necessary aspects of any capitalist endeavour. While it is in fact very normal for that to be the case, it simply does not follow that it must be the case.

Profits can be set aside in part to address social needs, and often have been by way of small percentages of annual profits set aside for charitable and philanthropic causes by corporations. This need not necessarily be a small percentage. In fact, there is no reason why an enterprise cannot exist for the primary purpose of generating profit for social needs — i.e., a P-CED, or social, enterprise. This was seen to be the potential solution toward correcting the traditional model of capitalism, even if only in small-scale enterprises on an experimental basis.”

“Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”

Later in 2004, we contacted Senator Edwards again. on the eve of the US election where he stood with John Kerry for election. 

"Your final ticket and the ticket to economic transformation in America is, oddly enough, American people.

I worked through this theme eight years ago, in a paper for Clinton’s reelection steering committee.  After 35 pages of methodical analysis, and six weeks of debate with any and all challengers in Chapel Hill area prior to the paper being finalized and released, it reduced to a concept called people-centered economic development.  No one along the way prevailed in any debate on the matter, and no one since then has disagreed in any way with the conclusions.  In fact, since 1998, Yale, Stanford, Duke, Harvard, and Oxford business schools have embraced the arguments in the paper as a new, formal economic paradigm.  The government of the United Kingdom of Great Britain has, as of 2002, included the paradigm as formal UK economic policy.  Those are all under the shortened banner of ‘social enterprise.’ "

The following year Edwards opened the Center on Poverty, Work and Opportunity on the campus at UNC in Chapel Hill. He drew attention to the wealth disparity in the US with his Two Americas' campaign

John Edwards, standing again for the Presidency would be praised for pointing out that global poverty is both a moral and a security issue, as he and Clinton had been advised earlier.

 

It was in 2008, in the context of efforts to tackle poverty in Eastern Europe that I forwarded another fax to the Senate Committee on Foriegn Relations where the current President and his VP, Obama and Biden sat at the time. It was yet another call for "an alternative form of capitalism, where profits and/or aid money are put to use in investment vehicles with the singular purpose of helping the world’s poorest and most vulnerable people"

 

Today Al Gore, Clinton's Vice President draws our attention to the issue of income inequality in his blog which includes a recent vrial video on wealth distribution

".Too much wealth concentrated in the hands of too few disrupts societal stability and corrupts the wealth-creating incentives of our capitalist system. Anger over income inequality has already sparked popular backlash in the form of Occupy Wall Street and other similar demonstrations. Indeed, the level of inequality in the U.S. is already worse than in Egypt or Tunisia, two nations rocked in recent years by popular uprisings that overthrew national governments during the Arab Spring."

 

 

In 2011 the author died in his efforts to help some of the world's most disenfranchised, leaving behind a message for the Council on Foreign Relations. . At the time it was chaired by Joe Biden and Barack Obama was a member:

"There is increasing congruence and synchronicity in play now, to the point of attunement. What Ms. Fore is describing has been central to P-CED’s main message, advocacy and activity for a decade. That, and helping establish an alternative form of capitalism, where profits and/or aid money are put to use in investment vehicles with the singular purpose of helping the world’s poorest and most vulnerable people. The paper on which that is based is in Clinton’s library, dated September 16, 1996, author yours’ truly. That is reflected in P-CED’s home page and history section. In fact, you might notice a number of ideas and writings there that have now made their way into the mainstream of economics and aid thinking, how to make business and aid work smarter and more effectively in relieving poverty and the misery and risks that result. Bill Gates – as hard-edged a capitalist as has ever existed – reiterated the same things in Wall Street Journal a couple of weeks ago (ref below.) It sounds as though Ms. Fore’s remarks very much reflect this sort of thinking. Now it’s time to move forward and get it done.

Thank you for your time and attention to this. I and others will look forward to hearing from you. I hope we continue to realize ever more fully that outside the box and inside the box have only a box in the way. We outside the box know quite a bit of what’s going on, many times in exquisite detail, perhaps in ways that those inside the box can’t quite as easily access if at all. We are grossly underfunded in favor of missiles, bombs, and ordnance, which is about 100% backwards. Now, with even the US Pentagon stating that they’ve learned their lesson in Iraq and realize (so says top US general in Iraq ten days or so ago) that winning hearts and minds is the best option, I and others shall continue to think positive and look for aid budgets and funding spigots to be opened much more for people and NGOs in silos, foxholes and trenches, insisting on better than ordnance, and who understand things and how to fix them. We can do that. We can even do it cost-effectively and with far better efficiency than the ordnance route. Welcome to our brave new world. Except it’s not so new: learn to love and respect each other first, especially the weakest, most defenseless, most voiceless among us, then figure out the rest. There aren’t other more important things to do first. This message has been around for at least two thousand years. How difficult is it for us to understand?"