fungible thoughts

The incentives of capitalism are increasingly tied to disasters. We’ve built a system to respond to disaster which benefits the organizers of relief efforts rather than aiding those who are victims of the actual disaster.

Advocates of a free market system argue that hard work should be rewarded. The exchange of goods at fair market prices makes the world go round. We make transactions every day which influence global dynamics. The more we buy, the more those trade lines are incentivized to strengthen.

Think of the world like a giant brain. When we think a certain thought or do a certain action, there is a specific pathway of neurons that are activated in our brain which execute that action. The more we do a certain action, like swinging a golf club, the more those neural pathways are reenforced. Enter, muscle memory.

When we reenforce certain trade pathways, the systems that are in place to facilitate those transfers of goods are strengthened. Cycles of investment dictate that when old methods of transacting are dated, we find new and novel methods of transacting. We used to have open outcry markets for stocks, for example. Now we are able to buy financial securities from anywhere in the world from the comfort of our desks.

It used to be in the realm of government to react to disaster. Similar to how a cobbler used to make shoes, the invisible hand of capitalism found a way to outsource that activity to mass produce and achieve economies of scale. Instead of making the shoes themselves, Nike has outsourced those activities and remains the designer, coordinator, seller, and checkbook.

Bush the younger ran for office on a less-is-more policy ticket. He won and government got smaller. He outsourced large parts of what government had formerly done to consultancies and contractors. War and military presence became a contracting and consultancy business. He outsourced security for important individuals and the building and maintenance of military bases. When Katrina hit Louisiana, he outsourced FEMA’s operations to contractors, who sometimes hired secondary contractors. For more on this, read The Shock Doctrine by Naomi Klein.

These companies who are contracted by governments to perform governmental tasks are capitalistic by nature. They set goals based on revenue and profits. They are designed to maximize the market for their products and services. Private markets, those only accessible to the wealthy, are obsessed with finding attractive, growing companies, with driven founders and a scalable business model.

This profit seeking mentality within formerly governmental functions goes against the functions of government. We’re a wildly inventive and creative species in extracting capital into our own pockets. We’ve built an incredibly complex global society through trade and collaboration. I’m not arguing against the free market in the sense that everyone gets their fair shot at becoming rich. I AM arguing that some functions do not belong in the realm of captialism.

When we let companies who optimize for the greatest wealth extraction after a disaster, natural or otherwise, we disincentivize disaster prevention. We have already seen this phenomenon within health care in the United States. When we provide sick care rather than health care, we have already lost the battle.

The building of systems in which these neural pathways are reenforced is the building of a system which feeds on distress.

Entrepreneurship, asset appreciation, and inheritance are the main ways that individuals and families become wealthy. Asset appreciation is the main way that most individuals fund their retirement years. Financial markets have identified that individuals are conscious of how their investment portfolios reflect their personal values.

There exist low cost investment products which identify and sort companies based on their sources of revenue. Some of these areas which have been identified as “non-ESG” are fossil fuels, non-diverse representation on boards, weapons, paramilitary, surveillance, etc.

The nomenclature of disaster capitalism needs to be examined in this context. The idea is that these companies are a hedge against impending climate disaster and are first responders in distributing capital to build back stronger. When geographical areas are hit by disaster, these will be the companies who step in, take charge, and try create a profitable environment for themselves. On the surface these companies may like good investments, they’re helping. Dig deeper and find they are incentivized to continue to lobby against climate change and for political discord.

The US government in particular has become particularly adept at swooping in and redistributing capital in the event of a disaster, whether man-made or natural. As the next administration looks at further chopping governmental functions, be on the look out for who takes over those functions and critically analyze the incentives outlined in their investor relations reports relative to the purpose that they are designed to serve.

Not sure if this made any sense. Something I needed to get out of my head and onto paper. Write me if you want to talk more. I’ll be posting more often with these word diarrhea posts as I’ve decided my opinions matter. XD

-tommanderinchief

fungiblethoughts@gmail.com

Opinions are my own and do not reflect on my employer.