The law and the profits

We studied the social process in our “Social Economics” class, plus walked through virtual wealth, popularly called “phantom wealth” in David Korten’s Agenda for a New Economy. His agenda is “from Wall St. to Main St.” President Obama alluded to it in his election acceptance speech when he declared: “…we cannot have a thriving Wall St. while Main St. suffers.”

Financial profit propelled China’s 30-year-old advance into the global economy; depending on the law of the financial market guided by central government offices. Much of China’s wealth is borne out of currency exchanges. Financial investments from around the world create assets in real estate development markets, and stock markets promote investments into China as worth the expenditures while stock offerings from China are deemed worth investing into. Now, the abundance of currencies has government ranks reeking with corruption, money hightailing it to havens provided by partner investors. CPC recognizes the embarrassing reality that in this proletarian state, the disparity between the have and the have-nots is deep and wide.

To be sure, actual goods and products come out of factory lines. China’s green economy industries are at the cutting edge. Rail transport has domestic flights review scheduling as surface traffic becomes more affordable and efficient. But marketing is the name of the game, from the overarching spin of China Inc. to the actual ground sales of trinkets, cosmetics, and junk food. Training in marketing is at a premium high in the pedagogy of higher learning. The book Poorly Made in China highlights what the government is trying to overcome, of shoddy production processes oblivious of human labor practices and sustainable environmental concerns.

Contractual arrangements in China are more social than legal; marketing is not new. It is strict adherence to legal procedures that is, and there is apprehension that leadership is evolving away from squeaky clean practical engineers (e.g., reformist President Hu Jintao and Premier Wen Jiabao) to lawyers trained in defending phantom wealth rather than human health. In the meantime, the marketer rules the Renminbi!

The late standup comic Bill Hicks opened his routines by asking if there were any marketers in his audience. Hicks then thundered to them: “OK, go kill yourselves!” Much of his comedy ranted against the marketers’ getting consumers to want something in order to buy what we do not need. Hicks’ presented reality as unpalatable truth.

Truth is in the mind of the perceiver, but reality intrudes. This past weekend, reality intruded on two truths. From Syracuse, NY, a bikers’ protest against wearing helmets turned tragic when one of the riders abruptly stopped and spun himself out of his bike, landing with his head on the handlebar. He was DOA at the local trauma center.

From Texas, a bar owner was opening a watering hole over the strong objections of the nearby local church. The congregation held regular prayer meetings seeking divine intervention to stop the actual opening of Tequila’s door. Lightning struck a week before opening and the place got incinerated. “Acts of God” are not covered by insurance so the businessman sued the church. The judge in whose sala the case landed, chuckled: “It seems,” he judicially intoned, “that we have here a bartender who fervently believes in the power of prayer, and a Church that disavows it!”

The law today is on the side of profiteers, all subject to the power of the marketers’ spin to get us to part with our money on what we do not necessarily need. That, or erect light poles on our Marpi because “we are the law”!

A variant is usury. In local markets, fresh produce comes early in the morning from the farms, the ponds, or the shores. At the depot, retailers buy at wholesale price and either go directly to the market stalls to resell the goods, or, in the case of sea and fresh water products, pack them in sealed and often cooled containers for transport elsewhere.

There is always a person available to provide capital in increments of 600 pesos, but only hands out 500 pesos. Come sundown, the 600 pesos is returned, avoiding the law against excessive gains. One out of five is 20 percent. Per day! On record, there is no interest on any loan. The moneylender, a prominent contributor to an election fund, is assured friendly police assistance when collection enforcement requires legitimate muscle. When other muscles are employed, which often occurs, procurement of the coercive service justifies the return on investment.

Legitimize the process, replace the players, and enlarge the scope of coverage beyond the palengke (wet market), and we have a picture of how phantom wealth is created nationally and globally. No actual tangible goods is involved save the virtual value of the medium of exchange, the insurances and assurances bought, and derivatives created to soak up residues of fear. Currency multiplies itself. The buccaneers and profiteers of Wall St. ride limousines off NYC’s Park Ave. and Makati’s Paseo de Roxas, rest at Victoria’s Pok Fu Lam Rd., and look down on Huangpo River atop Pudong skyscrapers over the Shanghai Bourse. They drive Rolls Royces and thrive on phantom wealth.

When the bubble bursts, the government will just print more money, or “adjust” existing supply. Main St. in America pays the cost. Wall St. is too big to fail so it churns more phantom wealth. Washington bails out, blesses, and stands guard.

China will avoid similar mistakes. Nah!