It takes only two things to keep people in chains:
- The ignorance of the oppressed and
- The treachery of their leaders.
Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance yourself from those “below” you in any socio-economic (income/wealth/power) ranking, and to come nearer those “above” you. The socio-economic distance is referred to as “The Gap.”
Gap Psychology manifests in infinite ways. It is everywhere in your life:
Bigotry is the dislike and/or demeaning of any group that is in some way different from your own or admired group.
Bigotry can be based on race, religion, age, weight, height, wealth, geography, political beliefs, or on any other attributes.
We tend to distance ourselves from groups we consider to be lower and to try to associate ourselves with groups we consider to be higher.
In compassionate or charitable people, this desire is repressed. In bigots, this desire is overwhelming.
Members of upper-income groups often feel disdain, even fear, about those in a lower income group, and wish to widen the socio-economic Gap between themselves and the lower group.
Widening the Gap is not limited to increasing one’s own income, power or wealth. It also can include reducing the income, power or wealth of those below.
It is the Gap width that matters, not the absolute income, power or wealth.
If you own $100 and everyone else owns $1, you are rich. But if you own $1 million, and everyone else owns $200 million, you are poor.
The Gap is what makes you rich or poor. Without the Gap, no one would be rich (We all would be the same.) The wider the Gap, the richer the rich are.
Few acts more clearly exemplify Gap Psychology than harassing the weak, or seemingly weak.
The object of the bully is to lift himself by stepping on others.
Bullies live in fear of being found wanting or of being associated with those below. Typical of bullies is bluster, the attempt to lift oneself by making self-association with some superiority, i/e claiming “I’m the greatest [individual]” to appear close to those above.
If basketball star Michael Jordan endorses a certain brand of basketball sneaker, buyers might assume he has special knowledge about what makes for the “best” basketball shoe. But what if Jordan endorses a brand of Tee-shirt? Why would that be convincing?
That sort of advertising is effective when buyers have a psychological belief that in some vague way, buying the shirt will make them more “like Mike.”
The fundamental purpose of clothing is to protect your body. This can be accomplished in many simple, inexpensive ways. So why do you pay more to wear designer clothing?
A woman’s purse can accomplish its “bag” mission for just a few dollars. Yet some designer purses cost thousands of dollars.
Women pay these outlandish prices to close the distance between them and those financially above them.
The fundamental purpose of a car is transportation. A functional car, especially a used model, can be had for a few thousand dollars. Why then do you own (i.e. want to be seen in) a BMW, Lexus, Mercedes, Ferrari, or Rolls?
And then there are mansions, diamonds indistinguishable from “paste”), charitable contributions made public, personally named buildings, etc.
All are part of Gap Psychology.
Group and Team Support
As social animals, humans rely on groups, or at the very least, partners. Evolutionary survival has meant being part of a strong group or having a strong partner to watch your back.
With no thought necessary, people will support all sorts of groups — religious, sports, business, neighborhood, political. To be a “fan,” i.e. a fanatic, comes naturally.
It scarcely is possible to watch a sporting event between two unknown teams, without mentally aligning yourself with one of the teams.
All of the above merely demonstrate that Gap Psychology is in our genes, and there are innumerable Gaps. But there is one Gap that is most important of all:
The Power Gap
The power Gap, or more specifically, the income/wealth/power Gap, is the Gap that truly rules our lives. Like all Gaps, the power Gaps are bifurcated into the Gaps below you vs. the Gaps above you.
Lord Acton’s famous phrase, “Power tends to corrupt, and absolute power corrupts absolutely,“ applies here.
The certainty of the relationship between power and moral corruption is why the U.S. Constitution was created, especially its Amendments, the first ten of which commonly are known as the “Bill of Rights.”
The greater the power Gap between you and others who are “above” you, the greater will be their tendency to treat you badly and to demand your servility, especially if they are insecure about their own power.
American slavery, for instance, was evil, not only because the slaves were . . . well, enslaved . . . but just as importantly, because of the evil, corrupting effect it had on the slave owners.
Slavery cost America its moral compass, the loss from which many of us still have not recovered.
Sadly, some in America’s South still consider slavery to be a proud part of their heritage, and in the entire nation, the remnants of slavery exist as bigotry.
Our tax codes are a collection of laws, and our laws are ruled by the richest and most powerful. That is why the most important financial laws in America are regressive:
- Sales taxes are regressive in that they most affect the lower-income groups, who use a greater proportion of their income on taxable purchases. (The upper-income groups use a greater proportion of their income on investments.)
- FICA taxes are regressive because they are levied only on salaries, not on investment income, and are limited to the $100M range.
- Income taxes, though ostensibly progressive, actually are regressive in that special rules allow the rich to avoid paying the stated percentage (aka “loopholes”).
- Student loans (which amazingly are the single largest asset class owned by the federal government) are regressive in that the rich don’t need them, while the poor can be held down with them for many of their otherwise most productive years.
Kick Them When They’re Down
That old phrase, “Kick them when they’re down” succinctly describes Gap Psychology. When we join in the “kicking,” we separate and lift ourselves from those being kicked.
A nation is a collection of rules and traditions, which often are manifested in laws. The laws have power over the people of the nation, and the nation’s leaders have power over the laws.
An immutable, or nearly so, Constitution was necessary to prevent each succeeding leader from redesigning the laws to favor his own passions.
Sadly, the corrupting power the Constitution was designed to prevent, still remains as the corrupting power that interprets the Constitution.
American history is replete with examples of a corrupted President, Congress, and Supreme Court twisting the words of the Constitution.
For example, the overly admired Franklin Roosevelt interned American people of Japanese descent, aided and abetted by our Constitutionally protected institutions.
The people, being a small minority, had little voting power, and whatever power of national empathy and compassion they had, dissipated with Pearl Harbor.
Being powerless, the people were set upon by those in power, using the traditional excuse of dictators: “National security.”
The fundamental meaning of the 4th Amendment (unreasonable searches and seizures) routinely is violated by police, with the full acceptance of the Supreme Court. People, who only are suspected of a crime, have seen all their assets stolen by the police, and not returned even after being declared innocent.
Public outcry about this clearly unconstitutional action has been muted. The British have a phrase for that sort of Gap Psychology: “I’m all right Jack, pull up the ladder”.
By “pulling up the ladder,” one separates from the unfortunates who remain below.
Law and Punishment
All law answers two fundamental questions:
- What is unlawful?
- What is the punishment for violating the law?
The mores of any civilization form the basis for answering both questions. But in society, the rich and powerful are treated more favorably by lawmakers and judges, who themselves are powerful.
Consider bail and bail bonds (bail handled by a bondsman), one of the more regressive aspects of American law.
The implicit purpose of bail is to guarantee the defendant will show up for trial.
Bail is not supposed to be a punishment. Usually, bail is set before a trial, meaning before the accused is known to be guilty, so punishment would be inappropriate. Yet in its use, bail functions as a pre-judgment punishment.
Judges decide the amount of bail on the basis of:
- the risk of the defendant fleeing,
- the type of crime alleged,
- the “dangerousness” of defendants, and
- the safety of the community.
An impoverished defendant might remain imprisoned by a $100 bail, while a wealthy defendant might go free and flee the country, even after putting up a million bail dollars.
But, the real risk of a defendant fleeing has nothing whatsoever to do with the defendant’s wealth.
If a judge is concerned that a defendant will flee, what then is the purpose of bail?
- A rich guilty person very well could decide that fleeing and losing the bail money, is preferable to spending years in jail.
- Lost bail money does not compensate the victims of the crime.
- An innocent poor person is punished by the bail system.
The entire bail system is designed to allow the accused rich to separate themselves from the accused poor. It is a product of Gap Psychology.
Gap Psychology is everywhere, affecting our beliefs, our customs, and our laws. It is the proverbial “800 lb. gorilla” in every room of our lives.
Gap Psychology separates not only the rich from the poor, but it separates the poor from the very poor and the not-so-poor, the very rich from the almost-rich and the upward-middle, hoping-to-be-rich. It separates the powerful from the powerless.
Gap Psychology affects the clothes you wear, the house in which you live, the schools you attend, the car you drive, the stores and restaurants you frequent, the church you attend, your job, your hobbies, your vacations, your voting, the person you marry, even the name you give your child.
Visualize that you have built a wall around yourself to separate you from the “other.” The height and thickness of that wall, and the existence of any entrances all are based on Gap Psychology.
Gap Psychology guides our society. It should not be overlooked when we search for answers to any social question beginning with, “Why?”
This brief post leaves us with three truths:
- Monetary Sovereignty is fundamental to questions about federal government and non-federal finances.
- Gap Psychology is fundamental to questions about social interactions
- Monetary Sovereignty and Gap Psychology are fundamental to Economics. All questions in Economics ultimately lead to Monetary Sovereignty and Gap Psychology.
Rodger Malcolm Mitchell
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
The most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.