The players discussed on the previous page make positive contributions to society by directly creating value, preserving and protecting already created value, facilitating easier creation of value and entertaining those who create value. If our economy could consist only of these people, life would be pretty awesome. Unfortunately, however, there are a large number of players who make no or even negative contributions, thereby putting a lot of pressure on those who create the value that keeps our economy running. These are discussed below.
These are people who do not contribute in any way to value creation within our economy. Included in this group are children, pensioners, the unemployed and those with serious handicaps. People falling in this category consume value, but do not create anything in return. In many cases this is through no fault of their own, but the reality is that these people are guaranteed to consume more value than they create; something that does not work very well in an exchange economy.
The USA has 44 million pensioners and more than 50 million people receiving some form of government welfare. Together these two groups account for close to 30% of the entire population. Those under the age of 18 account for another quarter of the population. In total, significantly more than half of the population add no value to society whatsoever and this number is set to increase significantly as the baby-boomer generation starts retiring. Due to the sheer magnitude of this group, the average worker in the world’s largest economy not only has to provide for his/her own consumption, but also for that of more than one additional person.
This group is discussed in detail on another page and is seen as one of the primary reasons why our current economic system is fundamentally guaranteed to collapse. In short, market speculators use a wide array of rather bizarre financial instruments to lever up their bets, manipulate the market and make huge profits out of the resulting speculative bubbles. The biggest of these financial instruments is called derivatives and the total valuation of these fictional paper claims on almost everything on earth (now and in the future) is currently 30 times greater than the value of the global economy.
In practice, market speculators use these tools to channel wealth to themselves without adding any value to society whatsoever. Since they gain value without making any meaningful contribution to society whatsoever, this value can only come from someone else or even from future generations. Speculation is therefore nothing but a legal form of theft.
Speculation also leads to enormous malinvestments. For example, all of the housing bubbles that have paralyzed the developed world was created by speculation (people taking on as much debt as possible so as to increase their exposure to the booming housing market). Since many people bought houses they had no intention of ever living in or could simply not afford, the USA alone now has 20 million empty homes – a humongous malinvestment of roughly $4 trillion. This is quadruple the total amount of money that has been thus far been invested in the renewable energy infrastructure our society so desperately needs.
This category is normally filled by elements from the “efficiency enhancers” category discussed on the previous page which have become so large, complex and wrought with bureaucracy that their actions actually impede the creation of value instead of enhancing it. A very important real world example is modern big governments who seem to be trying to run the lives of the electorate to ever increasing degrees.
It is important to note that this category is even worse than the non-creators category. Creation preventers still consume value, but instead of giving nothing in return, they actually impede the creation of future value. This is bad in every way and, unfortunately, most skilled workers (those capable of directly creating the massive excess value society needs) will agree that our overly regulated modern society is getting more and more of this every single day, thereby greatly impeding those who have the ability to build a sustainable global civilization.
This is the lowest level on our scale: people who, through their actions, destroy value instead of creating it. Groups in this category include criminals and the military. Although I am definitely not saying that military personnel and criminals are the same thing, the basic premise remains that both these groups often end up using their efforts to destroy value that has already been created. This is just about as bad as it gets.
So, those are the major categories. On the next page, we will start putting them all together.