One of the biggest examples of Bi-Polarization is the existence of Financial Markets and Bubbles. Bubbles happen because of the consistent need for the human mind to be part of the larger wave and not be left behind. Financial Markets facilitate these bubbles and help them exist. Actually its a little more complicated that that. Markets are designed to remove the inefficiencies of the financial system and matching Supply and Demand (.. or another Source and Sink) by providing a platform for pricing exchanging information
Now lets come to a very fundamental question. Are markets efficient or not? Of course people would say that markets are efficient because markets always price in all information. The problem is that this understanding is flawed. The markets are not efficient because some people always make money while others always lose. Why does the phenomenon exist. Occam's razor- because some market participants always have more information that others- its as simple as that- thereby making our perfect and efficient market a void theory.
Till the time the world was going through the Cold War, many countries were not in a situation to remain neutral and had to become party to the entire situation thereby taking sides. Even though some countries were neutral, many eventually became polarized either due to proximity or core ideology or whatever the reason is. The fall of the Soviet Union led to the beginning of a new era and in a bid to become a larger pole in the entire polarization scenario the more efficient system ( at the time) survived and ushered an age of consumerism and privatization.
But there happens to be an underlying weakness in capitalism as well. It might well be possible that the in the past the current form of capitalism showed more endurance than the failed version of Communism. The basic flaw is that Capitalism favors wealth or whoever has more wealth. This gives an undue advantage to the person who has more of it and puts others to a serious disadvantage. Capitalism works by adding a premium to money (in more laymen terms puts an interest rate to cash). To start any project we need cash. Capitalism designates a risk premium to this cash. So in more simple terms interest rates are like a carrot that has been placed in front of us- The ones who ride the horse are the wealthy. But who is following the carrot. Who is the mule? The mule is the working class- those who are starved of cash. Look at the vast economic disparity already existing in the world. Let's face it. The ultimate objective of capitalism is the increase share holder's value. This never ending cycle of increasing economic disparity could eventually be the reason for social unrest and possible future revolutions/alternate forms of governance.
Capitalism in its current form exists because people in power see little merit in the socialist form of governance and having already witnessed its failure in multiple times in history have out rightly rejected ideas of a inclusive growth strategies which could improve the world multiple times. But there is a catch. Capitalism has also failed- and more number times. That's what happens when we have financial bubbles- LTCM, subprime you name it, we have already seen it before. But the problem is that till the time the US continues to maintain its dominance in the world, we would continue to see this system function unless there is complete loss of confidence in the Dollar and their economy. I believe this reality is more closer than we think it is.
Eventually the central bankers and leading economic advisers in the world would figure out that extreme capitalism can lead to massive imbalances in any society. It would only be time before some madmen decide to take control by force if there is a critical mass and then we could land up in another totalitarian regime. Just that the imbalance created are usually trying to equilibrate and already existing imbalance. The underlying problem is that the human mind is not willing to change easily. Change comes at a cost and that work against the short term interests of the shareholders. However, if our governance systems had been more flexible and willing to evolve, we would not have situations like over population, inequality, gun culture, casteism, corruption, lack of medical services etc.
Why would it happen that in spite of having more than sufficient food in the world, there are people still dying of hunger. The reason is the underlying skewed nature of our minds. We are just not willing to accept that may be we are wrong and it is time to embrace a relatively tolerant and humane approach to things.
Lets look at a small piece of information I wanted to share which might change the way you look at everyone else around you. It is interesting to note that entire modern human civilization outside of Africa that we see today are descendants of a small tribe of around 100 people who managed to cross from Africa into Arabia many thousands of years ago. Yes, everyone around you, even your boss, your enemies, your wife and all before you have come from that small group.
Now lets come to a very fundamental question. Are markets efficient or not? Of course people would say that markets are efficient because markets always price in all information. The problem is that this understanding is flawed. The markets are not efficient because some people always make money while others always lose. Why does the phenomenon exist. Occam's razor- because some market participants always have more information that others- its as simple as that- thereby making our perfect and efficient market a void theory.
Till the time the world was going through the Cold War, many countries were not in a situation to remain neutral and had to become party to the entire situation thereby taking sides. Even though some countries were neutral, many eventually became polarized either due to proximity or core ideology or whatever the reason is. The fall of the Soviet Union led to the beginning of a new era and in a bid to become a larger pole in the entire polarization scenario the more efficient system ( at the time) survived and ushered an age of consumerism and privatization.
But there happens to be an underlying weakness in capitalism as well. It might well be possible that the in the past the current form of capitalism showed more endurance than the failed version of Communism. The basic flaw is that Capitalism favors wealth or whoever has more wealth. This gives an undue advantage to the person who has more of it and puts others to a serious disadvantage. Capitalism works by adding a premium to money (in more laymen terms puts an interest rate to cash). To start any project we need cash. Capitalism designates a risk premium to this cash. So in more simple terms interest rates are like a carrot that has been placed in front of us- The ones who ride the horse are the wealthy. But who is following the carrot. Who is the mule? The mule is the working class- those who are starved of cash. Look at the vast economic disparity already existing in the world. Let's face it. The ultimate objective of capitalism is the increase share holder's value. This never ending cycle of increasing economic disparity could eventually be the reason for social unrest and possible future revolutions/alternate forms of governance.
Capitalism in its current form exists because people in power see little merit in the socialist form of governance and having already witnessed its failure in multiple times in history have out rightly rejected ideas of a inclusive growth strategies which could improve the world multiple times. But there is a catch. Capitalism has also failed- and more number times. That's what happens when we have financial bubbles- LTCM, subprime you name it, we have already seen it before. But the problem is that till the time the US continues to maintain its dominance in the world, we would continue to see this system function unless there is complete loss of confidence in the Dollar and their economy. I believe this reality is more closer than we think it is.
Eventually the central bankers and leading economic advisers in the world would figure out that extreme capitalism can lead to massive imbalances in any society. It would only be time before some madmen decide to take control by force if there is a critical mass and then we could land up in another totalitarian regime. Just that the imbalance created are usually trying to equilibrate and already existing imbalance. The underlying problem is that the human mind is not willing to change easily. Change comes at a cost and that work against the short term interests of the shareholders. However, if our governance systems had been more flexible and willing to evolve, we would not have situations like over population, inequality, gun culture, casteism, corruption, lack of medical services etc.
Why would it happen that in spite of having more than sufficient food in the world, there are people still dying of hunger. The reason is the underlying skewed nature of our minds. We are just not willing to accept that may be we are wrong and it is time to embrace a relatively tolerant and humane approach to things.
Lets look at a small piece of information I wanted to share which might change the way you look at everyone else around you. It is interesting to note that entire modern human civilization outside of Africa that we see today are descendants of a small tribe of around 100 people who managed to cross from Africa into Arabia many thousands of years ago. Yes, everyone around you, even your boss, your enemies, your wife and all before you have come from that small group.
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